On 24th August 2016 the claimant issued protective proceedings against four defendants for damages in excess of £10 million in relation to alleged defects in the design and construction of a high bay warehouse and associated infrastructure ("the Works"). The third defendant ("Twintec") was responsible for the design and construction of a steel fibre reinforced concrete slab, which formed part of the Works, and was insured by Royal and Sun Alliance Insurance PLC ("RSA").

The Court of Appeal has confirmed that a company must have a settled intention to appoint an administrator before it can file a notice of intention to appoint and benefit from the interim moratorium that applies as a result. We cover this, and other issues affecting the insolvency and fraud industry, in this month's update:

The court has stressed the importance of validly serving a Statutory Demand before presenting a Bankruptcy Petition. The creditor must do all that is reasonably required to bring the service of the Statutory Demand to the attention of the debtor. Without effectively serving a Statutory Demand on the debtor, presenting a valid Bankruptcy Petition is impossible.

Background

After a lengthy consultation period, the Pre-Action Protocol for Debt Claims (PAPDC) has now been finalised and will come into force on 1 October 2017. This protocol will apply to lenders who are seeking payment of a debt from an individual/ sole trader, as a debtor or guarantor. Now is the time to update your systems and procedures to accommodate the new protocol requirements.

What is required?

This article was first published in Insolvency Intelligence 2017, 30(5), 85-87.

In an earlier edition of this publication I identified what appeared to be a growing trend for the making of a draconian form of order suspending the discharge of bankruptcies. This form of order is typically associated with the case of Mawer v Bland where Mrs Justice Rose upheld on appeal the following order made by Chief Registrar Baister:

Procedural framework

Paragraphs 49 to 55 of Schedule B1 to the Insolvency Act 1986 provide the statutory framework within which administrators seek approval of their proposals.

An administrator must make a statement setting out proposals for achieving the purpose of the administration within eight weeks of the company’s entry into administration and the administrator must seek a decision from the company’s creditors as to whether the creditors approve those proposals or not.

A case of two companies, one incorporated in Dubai and the other in England, involved in a network of businesses producing contrived fancy colour diamond valuations were eventually wound up by English courts in the interest of the public.

Claimant Litigant in Person recovers 150 per hour for his time

Spencer and another v Paul Jones Financial Services Ltd (unreported), 6 January 2017 (Senior Courts Costs Office)

Summary

A claimant litigant in person can recover costs at his typical hourly rate (150). Whilst the burden of proving such financial loss lies on the claimant, the burden is not impossibly high.

Facts

Karhoo, a US incorporated company able to benefit from the Chapter 15 US bankruptcy code provision for foreign insolvency proceedings following UK Administration.

A recent decision in the High Court has seen an application for pre-action disclosure of an insurance policy dismissed because the defendant was not insolvent.

Peel Port Shareholder Finance Company owned a warehouse that was damaged by a fire caused by Dornoch. They argued that their claim was highly likely to win but that, if it did, it would cause Dornoch to become insolvent.

Peel Port therefore sought ‘pre-action disclosure’, meaning Dornoch would have to disclose applicable insurance cover information to Peel Port before they decided whether to proceed.