Richard Eaton examines company voluntary arrangements (CVAs) and their growing use in the commercial retail property sector.

Are CVAs on the rise?

A misfeasance claim under section 212 of the Insolvency Act 1986 (IA) is often a race against time to gather evidence and bring a claim before the limitation period expires. Not only can the breach pre-date the liquidation by years, but the difficulty is even greater where there is a maze of group companies and intra-group transfers. It takes time to properly work out whether a simple transfer of assets between group companies is actually a corporate shield hiding misappropriated assets.

BEIS has just published the Government's response to its March 2018 consultation on "Insolvency and Corporate Governance" reforms (for our March alert on this, click

The liquidation of developers, contractors and sub-contractors are a regular occurrence in both large and small scale construction projects, with the insolvent company often left with claims against other firms involved in the development. The right to adjudicate and then make use of the summary judgment route to enforce the adjudicator’s decision has long been the most powerful tool at the disposal of the creditor company.

Over the last two years, BEIS has issued a number of consultations either focussed on, or touching upon, corporate governance issues in insolvency or the broader insolvency framework.

BEIS has just published the Government's response to its March 2018 consultation on "Insolvency and Corporate Governance" reforms. The response identifies a number of proposals for reform, as summarised below:

Action to improve the insolvency framework in the cases of major failure

Golden Rule 1: comply with the 7 general duties in the Companies Act 2006 (“the Act”)

In your capacity as a director you need to individually and personally comply with the seven codified statutory duties as a starting point.

On 15 January 2018, the UK’s second largest contractor filed for compulsory liquidation.

Shortly after, the Insolvency Service reported that there had been 2,668 insolvencies in the construction sector in the twelve months ended Q1 2018—more than any other sector.

The Court of Appeal judgment in JSC BTA Bank v Mukhtar Ablyazov, Madiyar Ablyazov [2018] EWCA Civ 1176 confirms the correct approach when assessing the ‘prohibited purpose’ element of section 423 claims.

Summary

In September 2008, the seismic collapse of Lehman Brothers initiated one of the largest corporate insolvencies in history. Nearly ten years later, in a landmark decision, the High Court has sanctioned the scheme proposed by the administrators of its principal European trading arm, Lehman Brothers International Europe ("LBIE").1