The Insolvency Service has announced that the UK government is planning to conduct an assessment of the impact of the voluntary industry measures introduced in November 2015 to improve the transparency of connected party pre-pack sales in Administration.

The 2014 Graham Review found that pre-pack sales were a useful business rescue tool but noted that there was evidence of less successful outcomes where the pre-pack sale was to a connected party.

The collapse of Carillion has raised many issues relating to public procurement, the actions of the board and the role of the auditors. But a press release by the Institute of Directors suggesting that in 2016 Carillion relaxed the clawback conditions that applied to bonuses has raised questions over remuneration governance.

Key Points

• Insurers had no priority rights to collect premiums over the proceeds of a successful action they had insured, as a result of a drafting error.

• The High Court affirmed the general rule that, where a party has contracted for an unsecured right only, the court will not elevate it to a secured status.

The Facts 

A recent TCC decision has concluded that the contractor insolvency provisions of the JCT form continue to apply after a termination by the contractor for repudiation. This conclusion may give rise to surprising results and potentially allow an employer to claim from the contractor additional amounts incurred in completing the works with a third party even after termination for the employer’s own default and/or repudiation.

UK burger restaurant chain, Byron Burger, has proposed a company voluntary arrangement (CVA) with its creditors in a bid to restructure the company's finances and rescue the business.

The creditor vote is due to take place on 31 January, with the CVA requiring at least 75% creditor consent for approval. The company is understood to be in talks with creditors and the proposed CVA is thought to be centred around the closure of underperforming restaurants and rent reductions at other branches.

A new funding round could be a good time to sort out capital complexity. We take a high level view.

Many privately backed companies go through several financing rounds and find they end up with a very complex capitalisation structure, with various classes of preferred shares, ordinary shares and deferred shares, not to mention employee incentives and debt instruments. A new funding round is a good opportunity to restructure and simplify this legacy.

The Inner House of the Court of Session has found that, where a business had no realistic prospect of continuing in existence, it was not appropriate to assess whether a property was sold at an undervalue by reference to a forced sale valuation.

The Court’s judgment serves as a valuable reminder of some fundamental principles of insolvency law.

The facts

The Insolvency Service has just released its personal insolvency statistics for 2017 revealing an upturn in overall personal insolvencies (just under 10% more than in 2016) and an increase of around 1/5th (19.8% on 2016) of people entering into Individual Insolvency Arrangements (IVAs). More people entered into IVAs last year than in 2008 (when many consider the credit crunch took its grip).

A company enters into compulsory liquidation when the court makes a winding up order. Upon the order being made, the Official Receiver ("OR") is automatically appointed as liquidator, however, the company's creditors may nominate an alternative licensed insolvency practitioner to act as liquidator. A liquidator's primary function is to realise the company's assets for the benefit of its creditors.

Following three profit warnings in recent months, the collapse of Carillion under a mountain of debt could hardly be described as a surprise. The fact that Carillion has entered compulsory liquidation may raise eyebrows. Administration would have allowed the company to continue operating whilst buyers were sought for those parts of the business that remained viable; liquidation is an acknowledgement that, by the time it collapsed, Carillion simply had no assets to sell that anyone would have been interested in buying. All that was left were the contracts.