Horton v Henry: Pensions clarified
We previously discussed the uncertainty surrounding the treatment of pensions in a bankruptcy which arose from two conflicting high court decisions: Raithatha v Williamson [2012] EWHC 909 (Ch) and Horton v Henry [2014] EWHC 4209 (Ch).
In Hinton v Wotherspoon [2016] EWHC 623 (CH) (where this firm successfully represented the trustee in bankruptcy, Lloyd Hinton of Insolve Plus Limited), the court commented that the approach in Horton v Henry [2014] EWHC 4209 (Ch) was “plainly correct”.
In the case of Re BW Estates Ltd the High Court considered the validity of a directors’ out of court appointment in circumstances where there was technically an inquorate directors’ board meeting.
A defined hierarchy of creditors exists when a company enters insolvency, with secured creditors being at the top, and first in line for payment once the Insolvency Practitioner’s fees have been met. Unsecured creditors, on the other hand, rank near the bottom of the list.
A secured creditor is generally a bank or other asset-based lender that holds a fixed or floating charge over a business asset or assets. When a business becomes insolvent, sale of the specific asset over which security is held provides repayment for this category of creditor.
The English High Court in Lehman Brothers International (Europe) (In Administration) [2016] EWHC 2417 (Ch), in one of a series of cases arising from the Lehman insolvency, has had to consider (among other issues) the meaning of “Default Rate” under the ISDA Master Agreement.
Creditors’ Voluntary Liquidation happens when shareholders and directors agree to place the business into liquidation because it can no longer pay its bills when they fall due. This is the most common form of liquidation in the UK.
A winding up order can be used by creditors to enforce payment of a debt by a delinquent company. Often as an act of last resort, creditors petition the court to have the business liquidated, usually after several failed attempts to recover their money.
The expense of going through the courts to obtain an order of this type indicates their determination, and this is a method often used by large secured creditors such as HMRC and the banks.
Understanding the rights of your employees in redundancy is an important part of any insolvency procedure. Here we look at what happens during various administration and liquidation processes, plus the way in which redundancy entitlement is calculated.
Staff redundancy following liquidation
The Court of Session has confirmed that the administration in Scotland of a Scottish company will take priority over an Indian liquidation of the same company, regardless of where the company’s business and assets are situated. The Court has also confirmed that the validity and enforceability outside the UK of a floating charge is irrelevant to the validity of an administrator’s appointment in Scotland under that floating charge.
Recent cases we have been involved in have highlighted the need for Insolvency Practitioners to pay careful attention to the effect that block transfer orders have on administrations where the exit route is a creditors' voluntary liquidation ("CVL"). Failure to do so could risk the appointment of liquidators being invalid.
The statutory requirements
On 30 September 2016, the Competition and Markets Authority (“CMA”) published its finding that two companies involved in the online retail of licensed sport and entertainment posters and frames had breached the Competition Act 1998 (“CA98”) by entering into agreements (or, at least, ‘concerted practices’) to artificially inflate the prices charged for certain products. A formal charge was accepted by the main protagonist, Trod Limited (in administration) (“Trod”) and fines imposed, which became payable by Trod’s administrators as of 13 October 2016.