The existing insolvency rules in the UK have been recast with the aim to "modernize and consolidate" the procedural framework for insolvency processes in the UK and promote efficiency. The Insolvency (England and Wales) Rules 2016 (the “New Rules”) came into force on April 6, 2017.

A key feature of the New Rules is a welcome overhaul of the provisions regarding communication with creditors, to allow for electronic communications instead of paper documents and physical meetings.

After providing an overview of ongoing scheme funding in the last episode, here we delve deeper into contribution obligations when an employer departs from a scheme. We tackle issues including when an employer's debt is triggered, how much the debt is and explore lawful ways to avoid the debt.

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This month we consider the court's view on the extent to which firms' activities in handling complaints are themselves subject to adjudication by the Financial Ombudsman Service; the exercise of the court's discretion in refusing an unopposed application to annul a bankruptcy order; and more cases and issues affecting the industry:

The High Court considers the remit of the FOS's jurisdiction

HMRC has published guidance on its views on the recent changes to the tax rules in relation to company windings up.

The Finance Act 2016 introduced a new Targeted Anti-Avoidance Rule (TAAR) to prevent “phoenixism” – broadly where solvent companies are liquidated so that shareholders dispose of their shares to realise a Capital Gains Tax charge rather than paying income tax on the profits that would otherwise be distributed.

The new rules will broadly apply where:

Bankruptcy and insolvency cases will be dealt with by the Business and Property Courts from 2 October 2017.

Insolvency Practitioners will welcome the change, which will enable insolvency litigation to be dealt with in a more efficient and cost effective manner in the regional centres.

Launch date

Introduction

In the recent case of BPE Solicitors v Hughes-Holland [2017] UKSC 21, the Supreme Court unanimously re-affirmed and clarified the principle established by the House of Lords in South Australian Asset Management Corporation v York Montague [1996] UKHL 10 (the “SAAMCO principle”). This article explains the clarification and the practical consequences it has for those seeking professional advice.

The SAAMCO principle

LBI EHF (in winding up) v. Raiffeisen Zentralbank Österreich AG and Raiffeisen Bank International AG [2017] EWHC 522 (Comm)

Minding the Gap

JCAM Commercial Real Estate Property XV Limited -v- Davies Haulage Limited [2017] EWCA Civ 267

Summary

The Court of Appeal has closed an important loophole benefitting tenants that are considering options for insolvency.

The Court of Appeal recently made an important decision on the equity of exoneration in the case of Armstrong (As Trustee In Bankruptcy Of Onyearu) V Onyearu & Anor (2017).

The UK case of Cherkasov & Ors v Olegovich, the Official Receiver of Dalnyaya Step concerns an application for security for costs against a liquidator.

A Russian court appointed a liquidator to the Russian subsidiary of a Guernsey unit trust.  The liquidator applied for recognition of the liquidation proceeding as a foreign proceeding in the UK under the Cross-Border Insolvency Regulations 2006.  The application for a recognition order was granted.