Background
Urbisity Ltd (the “Company”) was a developer of up market apartments. The Company funded its developments through various loans and its two directors, Nicholas Mullen (“NM”) and Christopher White (“CW”) acted as guarantors. Following the credit crunch, sales waned and, without substantial equity, the Company began selling property it owned and borrowing money from family members, one of which was NM’s father, Francis Mullen (“FM”).
This article was first published for Thomson Reuters' Practical Law Dispute Resolution Blog.
ADVISORY | DISPUTES | TRANSACTIONS Restructuring and insolvency roundup January 2018 In this roundup, we consider four cases with implications for all those involved in the restructuring and insolvency sector. This edition includes an article on crowdfunding, a sector which continues to be of interest to practitioners giving the changing regulatory landscape and the risk to investors. Other cases include two Court of Appeal decisions and cover privilege in bankruptcy, the adequacy of ATE policies, and the requirement for boards to be quorate when directors appoint administrators.
Key points
Once clear that an action is improperly constituted, it should not be allowed to proceed.
Those in control of a company have the duty to manage that company in accordance with its constitution.
The Facts
Key points
Failure to comply with sections 333 and 363 of the Insolvency Act constitutes contempt of court for which a committal order may be obtained.
A trustee in bankruptcy should not usually require permission to apply for a committal order.
Correct procedure for application confirmed by the court.
The recent decision in Leeds v Lemos may create significant problems for Trustees in Bankruptcy as they attempt to fulfil their duty of realising a Bankrupt’s estate for the benefit of his creditors.
The case centred on the wish of the Trustee in Bankruptcy to rely on documents that the Bankrupt (and some third parties) claimed were privileged. The Trustee in Bankruptcy therefore asked the Court to compel the Bankrupt to waive privilege, so that the documents could be referred to in legal proceedings..
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
Daniel Maurice Wagner -v- Benjamin Vincent St John White [2016] WL 10574979
Tech entrepreneur Ben White has successfully defended Dan Wagner's application to set aside a Statutory Demand in relation to Mr White's £2m investment in Powa Technologies PLC ("Powa"). Ashfords advised Ben White, with Joe Curl acting as counsel.
The Facts
The Facts
Norton Aluminium Ltd (NAL) went into Administration following a partially successful nuisance claim against it and subsequently went into Liquidation. Mr Dickinson was the managing director and controlling shareholder and brought a claim to recover a secured loan made by him to NAL. The Liquidators counterclaimed to set aside or recover compensation for various transactions, including a share buyback from Mr Dickinson and connected parties by NAL for £2.5 million and the sale of a subsidiary to Mr Dickinson for £1.