Partnerships which are breaking up face a series of urgent problems – particularly where the business itself is becoming insolvent. These difficulties can be amplified by failing relationships between the partners (who have to work together to wind up the business) and the potential need to realise assets rapidly to stave off the appointment of liquidators.

Heads of Terms’ or ‘Memoranda of Agreement’ (“MoA”) are commonly agreed by parties as a precursor to entering into more substantial agreements.

MoA are often intended by the parties to be broad statement  of commercial intent to enter into a contract, rather than having contractual force themselves. Accordingly, MoA are often drafted with a more relaxed attitude towards their contents

However, no matter what the parties may have intended, a MoA can easily amount to a contract depending on its drafting, exposing the parties to unintended liabilities.

The PPF is going ahead with the new insolvency scoring system developed by Experian.

It is also raising its requirements for contingent asset guarantees.

Key Issue

A former liquidator would not be entitled to relief from liability under section 212 of the Insolvency Act 1986 where her conduct had fallen well short of the standard to be expected and she had paid away substantial sums which would otherwise be available to creditors.

The Facts

In June 2013 the Complaints Gateway was established to provide a single entry point for regulatory complaints against insolvency practitioners.  The Insolvency Service has published an analysis of the complaints received by the Complaints Gateway in its first 12 months; the headline being an increase in complaints being made against insolvency practitioners from 748 to 941 complaints.

The recent unreported decision of the Bristol District Registry of the High Court in Blue Monkey Gaming Limited v Hudson & Others [2-14] All ER (D) 222 provides useful guidance for insolvency practitioners on the extent of their duties in respect of identification and preservation of ROT stock.

What was the case about?

The practice of energy companies in insolvency situations has long been a cause for frustration: in most cases the supplier will terminate the existing supply contract and a new - deemed - statutory contract at much higher rates will then apply.

If only it were as simple as swishing your wand and chanting "Wingardium Leviosa" in your best Hermione Granger voice. The question of whether a fixed charge is susceptible to being recharacterised as a floating charge has challenged the legal community since before Ms Granger was even born. In fact some of the case law would not be out of place in the Hogwarts library (although it wouldn't have done anything for JK Rowling's sales figures).

What's the difference between a fixed and a floating charge?

Can the landlord of a tenant that has gone into administration or liquidation claim preferential treatment, ahead of ordinary unsecured creditors, for the payment of rent?

In Goldacre (Offices) Ltd v Nortel Networks UK Ltd (in administration) it was held that, in the case of premises kept running by the administrators, all rent falling due after the date of the administration was payable ahead of ordinary unsecured creditors as “an expense of the administration”.

In the recent case of Schroder Exempt Property Unit Trust v Birmingham City Council, the High Court has confirmed that it is the landlord who is liable to pay business rates for an empty property following disclaimer of the lease by the tenant’s liquidator.

Under the Local Government Finance Act 1988, the person “entitled to possession of the property” is liable for rates.

The court held that, following disclaimer, the landlord had an immediate right to possession even though it had not actually taken possession of the property.