WATERFALL IIC JUDGMENT (ISDA MASTER AGREEMENT ISSUES)1
The Court of Appeal has resolved previously conflicting case law to confirm that a bankrupt cannot be obliged to crystallise his pension benefits in order to produce income to pay off creditors.
In the May 2015 edition of Pensions Priorities we reported on a case where the High Court found that an agreement dealing with the costs associated with the secondment of employees between group companies included liability for the receiving company to pay for the section 75 debt arising in relation to the seconded employees.
Finally a decision on whether a bankrupt can be compelled to draw down a pension: The Court of Appeal has finally handed down its long-awaited judgment in Horton v Henry [2016] EWCA Civ. 989, the case determining whether a Trustee in Bankruptcy can compel a Bankrupt to draw down his pension even though the pension is not in payment because the Bankrupt has elected not to call it down.
If you’re a company director then circumstances can arise in which you decide to offer personal guarantees in support of a loan application or your pursuit of a line of credit. Where these guarantees are given, a lender will take some reassurance that they could pursue a director personally for debt repayments in the event of the company becoming insolvent.
The question of whether and under what circumstances a director might find themselves liable for their company’s debts upon entering insolvency can quickly become a very pressing concern.
A summary of recent developments in insurance, reinsurance and litigation law.
This Week's Caselaw
Essar v Norscot: Court confirms that arbitrators can award the costs of litigation funding/time limits for challenging a corrected award
The IECA has released its Master Netting Agreement, a state-of-the-art solution ensuring credit exposures are managed and netted under a single, integrated framework that is flexible and easy to implement.
There has been considerable controversy about the extent of the powers, and the extent of obligations of a business rescue practitioner in relation to a cession of book debts by the company in rescue.
This is an important issue in business rescue because most financially distressed companies have an overdraft facility with a bank which is secured by a cession of debtors. Many practitioners want or need to use the overdraft facility as working capital.
Cession (generally)
Court holds Bankrupt cannot be forced to draw scheme benefits to pay creditors
In its judgment in Horton v Henry the Court of Appeal has held that where a bankrupt member has acquired a right to draw benefits, but has not yet done so (a) his rights under the scheme are not "income" over which the court can make an income payments order under section 310 of the Insolvency Act 1986; and (b) the trustee in bankruptcy cannot compel the member to take his benefits.
Background