Attachment of earnings - money is paid directly from the judgment debtor’s wages/salary into court by the debtor’s employer to satisfy the judgment debt.

Bankruptcy proceedings - you can currently apply to make an individual judgment debtor bankrupt for a judgment debt in excess of £5,000. The limit is £500 for applying to put a company into liquidation. The nuclear options.

A recent decision of the High Court (Goel and another v Grant and another [2017] EWHC 2688 (Ch)) has provided a useful reminder that care must be taken when administrators enter into pre-contract negotiations and the risk of inadvertently entering into a binding contract before terms are finalised. It also deals with the risks of disposing of assets, even those that are difficult to value, without due process.

The Facts

On 12 December 2017, creditors in the long running special administration of failed stockbroking firm, MF Global UK Limited (“MF Global”), approved a company voluntary arrangement (“CVA”). This case demonstrates the flexibility of the CVA procedure and the role it can play in complex financial services cases.

What is a CVA?

Question

My client is buying a property from a receiver appointed under an equitable charge granted by a company which has become insolvent. The charge gives a receiver a power of sale and contains a power of attorney. Will the receiver be able to sign all the necessary documents to allow the transaction to proceed to completion?

Answer

In this three-part series looking at the state of the UK retail sector, we have seen that retailers are facing a number of significant challenges and considered how these might shape trends in the sector, in both the short and medium term.

“There’s a magical place, we’re on our way there, with toys in their millions, all under one roof – it’s called… Toys R Us!”

The lyrics resonate with millions worldwide. The advert is as iconic as Coca Cola’s “Holidays Are Coming” commercial or the Sainsbury’s “Christmas is for sharing” World War 1 cinematic ad. Sadly, there is no longer a magical place aura emanating from the retail giant, but a sobering reality that its financial disarray may lead to the company’s demise.

The special administrators of MFGUK have come up with a CVA proposal for its remaining ordinary creditors, which will enable the winding-up of the estate to the benefit of the creditors.

The administrators have made a number of material settlements and realisations during the administration, simplifying the estate and permitting distributions to ordinary unsecured creditors of 90p in the pound.

Case Study: US-based unsecured creditor proactively protects its position and recoveries from the liquidation of its UK distributor

When a company enters into an insolvency process in the UK, the position of unsecured creditors is typically one of uncertainty. Ranking fifth1 in the insolvency payment waterfall, unsecured creditors frequently find themselves out of the money. Even in cases where there are sufficient realizations to make a distribution to unsecured creditors, they may receive only a minimal amount in respect of their outstanding debts.

Overview

The High Court has held that insurers who had facilitated litigation proceedings by an insolvent company were not entitled to a lien akin to a solicitor’s common law or equitable lien over the proceeds of the litigation to recover the deferred premium.

The vast majority of charter parties will include in their terms a lien clause which confers on the owner a lien over sub-freight (and sometimes sub-hire), for any amounts due to the owner under the head charter party. If the owner exercises his lien, sums which would otherwise be payable by the sub-charterer to the charterer under the sub-charter party, should instead become directly payable to the owner.