Summary

A liquidator rejected creditors’ claims. The creditors successfully appealed that decision and sought the costs of that application from the liquidator personally under rule 4.83 of the Insolvency Rules 1986 (as it then was) on the assertion that the reason the liquidator rejected the claims was that they exceeded the value of a potential misfeasance claim against the creditors and he did not want set off to defeat the misfeasance claim.

Creditors’ Case

When reviewing a security for costs application under CPR 25.12, the courts are faced with the challenge of striking a balance between an impecunious claimant’s access to justice and the possibility of a successful defendant being unable to recover their costs. This is because the general rule in relation to costs under CPR 44.2 is that the unsuccessful party will pay the costs of the successful party.

On 28 March 2017, the Enactment of Extra-Statutory Concessions Order 2017[3] was made which, amongst other things, enacts ESC3.20. The Order came into force on 6 April 2017.

ESC3.20 disapplied the clawback of input tax credit for an insolvent business that has not paid (or not fully paid) the consideration for a supply. New section 26AA of the Value Added Tax Act 1994 gives broadly the same effect as ESC3.20 in that it “turns off” the disallowance of input tax in cases of non-payment of consideration if:

In a judgment that will undoubtedly impact what has become fairly common practice when filing notices of intention to appoint an administrator (“NOITA”), the Court of Appeal has held in JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd[1] that a company seeking to give notice of intention to appoint under paragraph 26 of Schedule B1 to the Insolvency Act 1986 (the “Act”), and to file a copy o

On 6 April 2017, the Insolvency Rules 2016 came into force. The new rules aim to modernise the insolvency process; and make it more efficient. Physical meetings, as the default decision making process, have been abolished. Where the debtor ‘customarily’ communicated with a creditor by way of email notices can be served by email under deemed consent, rather than through the post. The rules also introduce the use of websites to publish notices, without the need to inform creditors of any postings.

This case raised the issue of when a company in financial distress (or the directors of that company) should issue a Notice of Intention to Appoint an Administrator (“NOITA”) which affords a moratorium under Schedule B1 of the Insolvency Act 1986 (“IA86”).

The Facts

The liquidator of a company refused to requisition a meeting of creditors on the basis that it was being called by the potential defendants to actions arising out of his investigations with the purpose of removing him and stymying any claims. The liquidator applied to Court for a direction not to summon the meeting.

The Decision

As of 25 April 2017, for courts within the Chancery division of the High Court in London, the filing of all applications, forms and documents must be performed electronically. This includes the Bankruptcy and Companies Courts within Greater London. It does not apply to the High Courts outside London.

The court’s sanction of DTEK's latest scheme includes novel references to its outstanding bank debt and helpfully rules on the controversial 'domicile test'.

The procedure for Debt Relief Orders ("DRO") is unchanged, possibly because it is a comparatively new process having only come into force in 2009. However there has been some shuffling of rules numbers, in an effort to regularise and make the structure more logical.

Eligibility

To be granted a DRO, the debtor: