Tag: Insolvency

Taylor v Van Dutch Marine Holding Ltd and Others: ChD 27 Mar 2017

Application by a secured creditor of a defendant against whom a freezing order has been made seeking an amendment to the freezing order to the effect that nothing in the order should prevent or restrict it from enforcing any rights it might have pursuant to its facility agreement and debenture.

Judges:

Mann J

Citations:

[2017] EWHC 636 (Ch), [2017] WLR(D) 213

Links:

Bailii, WLRD

Jurisdiction:

England and Wales

Contract, Insolvency, Litigation Practice

Updated: 24 March 2022; Ref: scu.581331

James Hill, Trustee On The Bankrupt Estate of Wilson and Brown v George and John Buchanan, Merchants In Glasgow: HL 11 Apr 1786

Sale – Bankruptcy. – 30 hogsheads of tobacco were bought on the eve of bankruptcy, and 8 hogsheads delivered the day before the failure was known, but the 22 hogsheads not delivered; the bills stipulated for the price were not granted; and the seller insisted for return of the 8 hogsheads. The bankrupts voluntarily returned them. Held, in a question with the creditors, that the seller was entitled to retain possession of the whole, on emerging bankruptcy.
The question in this case was, Whether a sale of tobacco, made by the respondents to Wilson and Brown, had been completed so as to pass the property before bankruptcy.

Citations:

[1786] UKHL 3 – Paton – 47

Links:

Bailii

Jurisdiction:

Scotland

Insolvency

Updated: 23 March 2022; Ref: scu.581012

Mrs Elizabeth Rose of Kilravock v James Rose, An Infant, and Francis Russel, Advocate, His Guardian: HL 2 Apr 1787

Succession – Heirs Primarily Liable – Relief among Heirs – Heirs whatsoever, how Interpreted? – Several estates belonging to the same ancestor, were together conveyed in security of debt by heritable bonds. Part of the estate descended, after his decease, to the heir of line, and another to the heir male. Held, reversing the judgment of the Court of Session, that the heir male has not relief against the heir of line, in so far as the bonds are charged on his estate.

Citations:

[1787] UKHL 3 – Paton – 66

Links:

Bailii

Jurisdiction:

England and Wales

Insolvency

Updated: 23 March 2022; Ref: scu.581020

Matthew Boulton, Esq and Others, Creditors of Samuel Garbet, A Bankrupt v Messrs Mansfield, Ramsay, and Co of Edinburgh,: HL 18 Apr 1787

Copartnery. – An agreement dissolved a Company, and transferred the retiring partner’s interest in stock, andc. of the concern, to the other partners, but provided that he was still to have a share of the profits of the concern. In a question with creditors, held, that the person so retiring was still a partner of the firm, and liable as such.

Citations:

[1787] UKHL 3 – Paton – 70

Links:

Bailii

Jurisdiction:

Scotland

Company, Insolvency

Updated: 23 March 2022; Ref: scu.581019

The Governor and Company of The Bank of England v William Pulteney, Esq: HL 14 Dec 1787

Heritable Security – Ranking – Indefinite Payments – Assignation. – A creditor held an heritable security for repayment of his advances, to the extent of andpound;12000. He also held an adjudication debt against the same debtors, for a bank debt paid by him for them, which was not included in the heritable bond. On the bankruptcy of the debtors, and ranking and sale of their estate, Held, that he was entitled to impute indefinite payments made to him to his least secured debt, so as to make the heritable bond cover the whole debts due to him within the amount of that security; and, therefore, that he was preferable, both for the balance due on the bond debt, as well as for the adjudication debt. In this last debt, another party was bound as co-surety. Held, that on payment, he was not bound to grant the creditors an assignation to his claim.

Citations:

[1787] UKHL 3 – Paton – 92

Links:

Bailii

Jurisdiction:

England and Wales

Insolvency

Updated: 23 March 2022; Ref: scu.581021

Singla v Hedman and Others: ChD 28 Apr 2010

The claimant sought an order for wrongful trading against the former directors of a company in liquidation, and to set aside agreements entered into after the liquidation, but backdated to before. The agreements related to the proposed making of a film.
Held: The first defendant had not been truthful.

Judges:

Peter Smith J

Citations:

[2010] EWHC 902 (Ch), [2010] BCC 684, [2010] 2 BCLC 61

Links:

Bailii

Jurisdiction:

England and Wales

Citing:

See Also – Singla v Hedman and Others ChD 27-Nov-2009
. .
Cited – Messager v British Broadcasting Association Co HL 1929
M composed of the music for a French opera ‘Le Petit Michus’. An English version was to be produced in London on the terms of an agreement, describing itself as a licence, between the composer and the authors of the opera, between the licensors, and . .
Lists of cited by and citing cases may be incomplete.

Insolvency, Company, Contract

Updated: 09 February 2022; Ref: scu.408672

Tager v Westpac Banking Corporation and Others: ChD 24 Dec 1996

A court has the power to extend the time allowed for a challenge to a voluntary arrangement.

Citations:

Times 24-Dec-1996, [1997] 1 BCLC 313

Statutes:

Insolvency Rules 1986 (SI 1986 No 1925) 4.218(1) 4.220(1)

Jurisdiction:

England and Wales

Cited by:

Cited – Warley Continental Services Ltd (in liquidation) v Johal ChD 7-Oct-2002
The liquidator sought to revoke or suspend the voluntary arrangement on the grounds of a material irregularity, but the application was lodged well outside the statutory 28 day limit, and he first sought leave to apply out of time.
Held: The . .
Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 09 February 2022; Ref: scu.89690

Rooney v Cardona and Another: ChD 24 May 1999

The trustee in bankruptcy had absolute priority for payment of his fees, costs, charges and disbursements only until the point where the bankrupts assets were transferred to a supervisor of a subsequent voluntary arrangement.

Citations:

Times 24-May-1999

Statutes:

Insolvency Rules 1986 (1986 No 1925) 5.21.2

Jurisdiction:

England and Wales

Insolvency

Updated: 07 February 2022; Ref: scu.88857

Green (Supervisor of The Iva of Wright) v Wright: CA 1 Mar 2017

The court was asked whether a trust in favour of creditors constituted by an individual voluntary arrangement (IVA) survives the issue of a certificate of completion of the IVA, so that property of the debtor, that was subject to the trust but was discovered only after the issue of the certificate, remains subject to the trust once it is discovered. Resolution of this issue turns on the proper construction of the terms of the IVA, in the context of its factual background, the relevant statutory regime and applicable legal principles.

Judges:

David Richards, Irwin LJJ

Citations:

[2017] EWCA Civ 111

Links:

Bailii

Jurisdiction:

England and Wales

Insolvency

Updated: 06 February 2022; Ref: scu.578204

Banca Carige Spa Cassa Di Risparmio Di Genova E Imperia v Banco Nacional De Cuba and Another: ChD 11 Apr 2001

Application to discharge order declaring that leave was not needed for service of proceedings on the defendant out of the jurisdiction.

Judges:

Lightman J

Citations:

[2001] EWHC 562 (Ch), [2001] 2 Lloyd’s Rep 147, [2001] 2 BCLC 407, [2001] BPIR 407, [2001] Lloyd’s Rep Bank 203, [2001] 1 WLR 2039, [2001] 3 All ER 923

Links:

Bailii

Jurisdiction:

England and Wales

Insolvency, Jurisdiction, Litigation Practice

Updated: 03 February 2022; Ref: scu.577490

Syme v Benhar Coal Co: SCS 12 Dec 1878

An application was presented to the Court by the provisional liquidator of a limited company to restrain a debenture holder from obtaining decree for the amount contained in his debenture bond. Held that the debenture holder was entitled to have decree, the liquidator not being prepared to find security for any damages the creditor might suffer, and application refused.
Held: Reid, a creditor of the Benhar Coal Company, had presented a petition for the judicial liquidation of the company. Upon representations by the company to the effect that they wished to investigate their affairs fully, and would require time, the Court of consent meantime appointed Mr Molleson, C.A., provisional liquidator.
In these circumstances, and Reid’s petition being still in Court, Thomas Syme, a debenture holder, raised an action in the Court of Session concluding for payment of andpound;1000, the amount contained in certain debenture bonds which he held of the company, and the provisional liquidator, with the concurrence of the company, in these circumstances presented a note to the Court applying to have Syme restrained from obtaining such decree.
The 85th section of the Companies Act 1862 was as follows:-‘The Court may, at any time after the presentation of a petition for winding-up a company under this Act, and before making an order for winding-up the company, upon the application of the Company, or of any creditor or contributory of the company, restrain further proceedings in any action, suit, or proceeding against the company, upon such terms as the Court thinks fit.’

Citations:

[1878] SLR 16 – 210

Links:

Bailii

Jurisdiction:

Scotland

Company, Insolvency

Updated: 03 February 2022; Ref: scu.577487

Oraki and Another v Dean and Dean: ChD 11 Jan 2017

Application for annulment of bankruptcies.
Held: Though the judgment upon whih the order had originally been made had been obtained by fraud, that did not of itself discharge the bankruptcy.

Judges:

Robert Ham QC

Citations:

[2017] EWHC 11 (Ch)

Links:

Bailii

Statutes:

Insolvency Act 1986 264

Jurisdiction:

England and Wales

Insolvency

Updated: 29 January 2022; Ref: scu.573844

Gas and Electricity Markets Authority v GB Energy Supply Ltd: ChD 21 Dec 2016

Application brought by the claimant, the Gas and Electricity Markets Authority acting through the officials of OFGEM for a declaration that the defendant company GB Energy Supply Ltd is unable to pay its debts and therefore conditions in the relevant Electricity Supply Licence and Gas Supply Licence, whereby GEMA authorises the defendant to operate as a gas and electricity supplier in the UK, are satisfied. If those conditions are satisfied then under the terms of the relevant licences GEMA can revoke the supply licences and appoint another energy supplier as a Supplier of Last Resort.

Birss J
[2016] EWHC 3341 (Ch)
Bailii
England and Wales

Utilities, Insolvency

Updated: 27 January 2022; Ref: scu.572752

Fehily and Another v Atkinson and Another: ChD 1 Dec 2016

A party sought annullment of bankruptcy orders made after their failure to comply with the terms of IVAs. The second claimant said that she had not had capacity to enter into the IVA.
Held: Her appeal failed. A failure to grasp the deail of an arrangement for lack of cpaacity was not enough to undermine the transaction provieded that she ‘ had the ability to absorb, retain, understand, process and weigh information about the key features and effects of the proposed transaction, and the alternatives to it, if they were explained to the person in broad terms and simple language.’

Stephen Jourdan QC
[2016] EWHC 3069 (Ch), 2016] WLR(D) 643
Bailii, WLRD
England and Wales

Insolvency

Updated: 26 January 2022; Ref: scu.571992

Sands (As Trustee In Bankruptcy) v Layne and Another: CA 29 Nov 2016

The court was asked whether section 375 allowed a court to review, rescind or vary an order which was previously made by that court in exercise of its jurisdiction to hear an appeal from a lower court.

Arden, Lewison, McCombe LJJ
[2016] WLR(D) 632, [2016] EWCA Civ 1159
Bailii, WLRD
Insolvency Act 1986 375(1)
England and Wales

Insolvency, Litigation Practice

Updated: 26 January 2022; Ref: scu.571941

Webb-Samann v Seagan: ECJ 24 Nov 2016

ECJ (Judgment) Reference for a preliminary ruling – Social policy – Directive 2008/94/EC – Article 8 – Protection of employees in the event of the insolvency of their employer – Provisions related to social security – Scope – Measures necessary to protect immediate or prospective entitlements of employees under supplementary pension schemes – Obligation to provide for a right to have outstanding pension contributions excluded from the scope of insolvency proceedings – Absence)

ECLI:EU:C:2016:891, [2016] EUECJ C-454/15
Bailii
European

Insolvency

Updated: 26 January 2022; Ref: scu.571888

Avonwick Holdings Ltd and Another v Shlosberg: CA 18 Nov 2016

Appeal from order directing firm of solicitors to cease acting for a bankrupt’s trustees on the basis that the solicitors had had access to substantial volumes of privileged materials when previously acting for the bankrupt.

Sir Terence Etherton MR, Gloster, Sharp LJJ
[2016] EWCA Civ 1138
Bailii
England and Wales

Insolvency, Legal Professions

Updated: 25 January 2022; Ref: scu.571418

Private Equity Insurance Group: ECJ 10 Nov 2016

ECJ (Judgment) Reference for a preliminary ruling – Directive 2002/47/EC – Scope – Definition of ‘financial collateral’, ‘relevant financial obligations’ and ‘provision’ of financial collateral – Whether it is possible to enforce financial collateral notwithstanding the commencement of insolvency proceeding – Current account agreement including a financial collateral clause

[2016] WLR(D) 587, [2016] EUECJ C-156/15
Bailii, WLRD
Directive 2002/47/EC
European

Insolvency

Updated: 25 January 2022; Ref: scu.571283

ENEFI Energiahatekonysagi Nyrt v Directia Generala Regionala has Finantelor Publice Brasov: ECJ 9 Nov 2016

ECJ (Judgment) Preliminary reference – judicial cooperation in civil matters – Insolvency proceedings – Regulation (EC) No 1346/2000 – Article 4 – Effects provided by the legislation of a Member State on loans not having been insolvency proceedings – Loss – tax Nature of debt – No effect – Article 15 – Meaning of ‘running instances’ – enforcement procedures – Excluded

[2016] EUECJ C-212/15
Bailii
Regulation (EC) No 1346/2000 4
European

Insolvency

Updated: 25 January 2022; Ref: scu.571272

Golstein v Bishop and Another: ChD 7 Nov 2016

[2016] EWHC 2804 (Ch)
Bailii
England and Wales
Citing:
See Also – Golstein v Bishop ChD 2-May-2013
. .
See Also – Bishop v Golstein CA 5-Feb-2014
. .
See Also – Golstein v Bishop and Another ChD 2-Sep-2016
Appeal against refusal of challenge to approval on an Individual Voluntary Arrangement. . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 25 January 2022; Ref: scu.570910

Nortel Group, Re (Global Settlement): ChD 3 Nov 2016

Application by the administrators of 19 Europe, Middle East and Africa (‘EMEA’) companies in the Nortel group (the ‘Administrators’). The Administrators seek directions from the court that they be at liberty to perform and procure that the companies perform a global settlement of the vast majority of disputes that have arisen in relation to the affairs of the Nortel group and the distribution of the proceeds of sale of its assets which amount to about US$7.3 billion

Snowden J
[2016] EWHC 2769 (Ch)
Bailii
England and Wales

Insolvency

Updated: 24 January 2022; Ref: scu.570850

SCI Senior Home, in administration v Gemeinde Wedemark: ECJ 26 Oct 2016

ECJ Judgment – Reference for a preliminary ruling – Area of freedom, security and justice – Judicial cooperation in civil matters – Insolvency proceedings – Regulation (EC) No 1346/2000 – Article 5 – Notion of ‘third parties’ rights in rem’ – Public charge against immovable property to ensure payment of real property tax

ECLI:EU:C:2016:804, [2016] EUECJ C-195/15
Bailii
European

Insolvency

Updated: 24 January 2022; Ref: scu.570591

Muhammed v Robert and Another: ChD 18 Jun 2014

Application for permission to appeal against an order dismissing Ms. Muhammed’s application to suspend a warrant for possession of her flat, where she lives, and stated the application to be wholly without merit. The application also seeks permission to appeal out of time a number of orders previously made.

David Richards J
[2014] EWHC 4800 (Ch)
Bailii
England and Wales

Insolvency

Updated: 23 January 2022; Ref: scu.570009

Hellas Telecommunications (Luxembourg) II Sca, Joint Liquidators of v Slaughter and May (A Firm): ChD 13 Jun 2014

Appeal by the liquidators of a company against the refusal of the Registrar to order that the fees of solicitors employed by the administrators previously in office, which have been agreed and paid by the administrators, should nevertheless be assessed by the court. It raises issues as to the effect of r7.34 of the Insolvency Rules, which provides that such fees may be fixed either by agreement of the responsible insolvency practitioner or by assessment, in circumstances where a liquidator disagrees with the decision of his predecessor.

David Cooke HHJ
[2014] EWHC 1390 (Ch)
Bailii
England and Wales

Insolvency, Costs

Updated: 23 January 2022; Ref: scu.570008

The Ruta: QBD 21 Mar 2000

Where a ship-owner became insolvent, and the only remedy for unpaid employees was against the proceeds of sale of the ship, such claims would be granted a priority over lienors of the ship. No formal system can be created compartmentalising such competing claims, but it was characteristic that the employees on the ship once engaged had had to continue. Where several ships were damaged in what was one incident they should be ranked equally.

Times 21-Mar-2000, Gazette 23-Mar-2000
England and Wales

Insolvency, Transport, Employment

Updated: 21 January 2022; Ref: scu.89844

Roberts v Pinnacle Entertainment Limited: ChD 21 Oct 2003

This was an appeal against a revocation of an approval of an individual voluntray arrangement. The notice to creditors inviting them to attend the meeting had been in an outdated form.
Held: The creditir had given suficient evidence of his debt to be allowed to vote at the meeting. The disallowance of the vote was a material irregularity, and the appeal failed.

The Hon Mr Justice Evans-Lombe
[2003] EWHC 2394 (Ch)
Bailii
Insolvency Act 1986 262
England and Wales
Citing:
Cited – re K G Hoare ChD 1997
A creditor who wishes to vote in respect of his debt must state to the best of his ability the total amount that is owing to him by the debtor. . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 20 January 2022; Ref: scu.187018

HM Revenue and Customs v Ariel: ChD 8 Jul 2016

The trustee in bankruptcy appealed against an order as to compliance with statutory notices issued by HMRC. The trustee argued that all but one of the orders was made in excess of jurisdiction.

Mann J
[2016] EWHC 1674 (Ch)
Bailii
Insolvency Act 1986 303, Finance Act 2008 Sch 36
England and Wales

Insolvency, Taxes Management

Updated: 19 January 2022; Ref: scu.566825

Re Paramount Airways Ltd (In Administration): CA 8 Apr 1992

It was said that there had been a transction at an undervalue within section 238. It was given effect by a transfer to a bank in Jersey, from which recovery was no sought. The bank claimed that the section did not have extra-territorial effect.
Held: The argument failed; the section did not purport to have any territorial limitation. There is no strict limitation on recovery proceedings against foreign residents. The provisions of the Insolvency Act 1986 for setting aside transactions at an undervalue had, as a matter of construction, world-wide application but the court had a discretion to refuse to make an order in a case not sufficiently connected with England: ‘In my view the solution to the question of statutory interpretation raised by this appeal does not lie in retreating to a rigid and indefensible line. Trade takes place increasingly on an international basis. So does fraud. Money is transferred quickly and easily. To meet these changing conditions English courts are more prepared than formerly to grant injunctions in suitable cases against non-residents or foreign nationals in respect of overseas activities. As I see it, the considerations set out above and taken as a whole lead irresistibly to the conclusion that, when considering the expression ‘any person’ in the sections, it is impossible to identify any particular limitation which can be said, with any degree of confidence, to represent the presumed intention of Parliament. What can be seen is that Parliament cannot have intended an implied limitation along the lines of Ex parte Blain, 12 Ch.D. 522. The expression therefore must be left to bear its literal, and natural, meaning: any person.’

Sir Donald Nicholls V-C
Gazette 08-Apr-1992, [1993] Ch 223
Insolvency Act 1986 238(2)
England and Wales
Cited by:
Cited – Serco Ltd v Lawson; Botham v Ministry of Defence; Crofts and others v Veta Limited HL 26-Jan-2006
Mr Lawson was employed by Serco as a security supervisor at the British RAF base on Ascension Island, which is a dependency of the British Overseas Territory of St Helena. Mr Botham was employed as a youth worker at various Ministry of Defence . .
See Also – In Re Paramount Airways Ltd (In Administration) ChD 14-Sep-1993
Administrators may adopt employment contracts without attracting personal liability. . .
Cited – Haines v Hill and Another CA 5-Dec-2007
On the divorce, the husband was ordered to transfer his share in the house to the wife. On his bankruptcy shortly after, the order was confirmed. After the wife sold the property at a profit, the trustee in bankruptcy applied to set the transfer . .
Cited – McGrath and others v Riddell and others HL 9-Apr-2008
(Orse In Re HIH Casualty and General Insurance Ltd)
HIH, an Australian Insurance company, became insolvent. An order was sought for the collection and remission of it assets in England under a letter of request from the Australia Court.
Cited – Bilta (UK) Ltd and Others v Nazir and Others ChD 30-Jul-2012
The company was said to have engaged in a fraud based on false European Trading Scheme Allowances, and had been wound up by the Revenue. The liquidators, in the company name, now sought recovery from former directors and associates.
Held: The . .

Lists of cited by and citing cases may be incomplete.

Insolvency, International

Updated: 19 January 2022; Ref: scu.85851

Visciano v Istituto nazionale della previdenza soziale: ECJ 16 Jul 2009

ECJ Social policy Protection of workers Insolvency of employer Directive 80/987/EEC Obligation to pay all outstanding claims up to a pre-established ceiling Nature of an employee’s claims against a guarantee institution Limitation period

C.W.A. Timmermans, P
[2009] EUECJ C-69/08 – O, ECLI:EU:C:2009:468, C-69/08
Bailii
Directive 80/987/EEC
Citing:
Opinion – Visciano v Istituto nazionale della previdenza soziale ECJ 2-Apr-2009
ECJ Social policy Approximation of laws Protection of employees in the event of employer insolvency – Directive 80/987 / EEC Obligation to pay claims arising from an employment relationship within the limit of a . .

Lists of cited by and citing cases may be incomplete.

European, Insolvency, Employment

Updated: 18 January 2022; Ref: scu.566480

Brown and Another v Stonegale Ltd and Another: SC 22 Jun 2016

The insolvent companies administrators sought reduction of alienations by the companies before entering into administration. It was said that their banker lenders had been misled as to the values of secured properties, agreeing to their release leading to losses, and their sale.
Held: The appeals failed: ‘The gratuitous nature of the alienations was clearly explained by the Lord Ordinary . . Before the various conveyances, the companies owned five properties. A bargain was in place for the sale of one of those properties, 278 Glasgow Road, for the sum of andpound;2.4m. After the sale was completed, andpound;2.4m was transferred to the bank in reduction of borrowings, and the companies retained the other four properties, valued at andpound;1.525m. Those properties were then conveyed to the appellants. The companies received nothing whatsoever in return. There was no reciprocity between those disposals and the earlier payment made to the bank. The purpose and effect of those transactions was to divert assets away from the companies’ creditors: exactly what section 242 is intended to prevent. That they were gratuitous alienations is plain and obvious.’

Lord Neuberger, President, Lord Sumption, Lord Reed, Lord Carnwath, Lord Hodge
[2016] UKSC 30
Bailii, Bailii Summary
Insolvency Act 1986 242
Scotland
Citing:
Appeal from – Brown and Another (Joint Administrators of Oceancrown Ltd) v Stonegale Ltd SCS 11-Dec-2013
Administrators sought to have set aside transactions made before the companies went into administration.
Held: Rejecting the director’s arguments, the Lord Ordinary said: ‘No one paid anything for 110, 210, 260 Glasgow Road and 64 Roslea . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 18 January 2022; Ref: scu.565828

Revenue and Customs v Lomas and Others (Administrators of Lehman Brothers International (Europe)): CA 19 Dec 2017

Lady Justice Gloster Vice-President of the Court of Appeal, Civil Division, Lord Justice Patten, and Lord Justice David Richards
[2017] EWCA Civ 2124, [2018] Bus LR 730, [2018] STI 259, [2018] STC 385, [2018] BTC 5
Bailii
England and Wales
Citing:
Appeal from – Lomas and Others v HM Revenue and Customs ChD 11-Oct-2016
Receivers’ payment of statutory interest gross
Substantial sums were to be repaid to creditors after the administration of Lehman Brothers produced a substantial surplus. The sums were to carry interest and the court now considered whether the sums due amounted to ‘yearly interest’ under section . .

Cited by:
Appeal from – Revenue and Customs v Joint Administrators of Lehman Brothers International (Europe) SC 13-Mar-2019
The Court was asked whether interest payable under rule 14.23(7) of the Insolvency Rules 2016 is ‘yearly interest’ within the meaning of section 874 of the Income Tax Act 2007. If so, the administrators must deduct income tax before paying interest . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 17 January 2022; Ref: scu.601510

LB Holdings Intermediate 2 Ltd, The Joint Administrators of v Lehman Brothers International (Europe), The Joint Administrators of and Others: SC 17 May 2017

In the course of the insolvent administration of the bank, substantial additional sums were received. Parties appealed against some orders made on the application to court for directions as to what was to be done with the surplus.
Held: The Court considered the so called waterfall of distributions made on liquidation which proved to be in surplus as set out in Nortel.
It was not be open to LBHI2 to lodge a proof in respect of the subordinated debt until the non-provable liabilities have been paid in full, it was clear that, after meeting that proof in full and paying any statutory interest due on it, the non-provable liabilities could be met in full. As soon as that has happened, there would, subject to what I say in the next paragraph, be nothing to stop LBHI2 lodging a late proof: ‘On the face of it at any rate, it seems a little strange that a proof can be, or has to be, lodged for a debt which ranks after statutory interest (which can only be paid out of a ‘surplus’) and non-provable liabilities. It may be that the proper analysis is that the subordinated debt is a non-provable debt which ranks after all other non-provable liabilities.’
Based the narrower or primary contention raised by the LBHI2 administrators, it is not open to the foreign currency creditors to seek to claim as a non-provable debt, the difference between the sterling value of the debt at the administration date and the sterling value of that debt when paid, where the latter exceeds the former.
The contractual right (in this case to recover interest and in the case of currency conversion claims, to be paid at a particular rate of exchange) has been replaced by legislative rules. On that basis, there is no room for the contractual right to revive just because those rules contain a casus omissus or because they result in a worse outcome for a creditor than he would have enjoyed under the contract.
Section 74 can be relied on to meet non-provable liabilities but not statutory interest: ‘I would allow the LBHI2 administrators’ appeal on the issue whether section 74 can be invoked in order to pay statutory interest, but I would dismiss their appeal on the issue whether that section can be invoked in order to meet other non-provable liabilities. I would therefore allow the appeal in part against para (vi) of David Richards J’s order.’

Lord Neuberger, President, Lord Kerr, Lord Clarke, Lord Sumption, Lord Reed
[2017] UKSC 38, [2017] 2 BCLC 149, [2017] 2 WLR 1497, [2017] BCC 235, [2018] AC 465, UKSC 2015/0138
Bailii, Bailii Summary, SC, SC Summary, SC Summary Video
Insolvency Act 1986, Insolvency Rules 1986
England and Wales
Citing:
At ChD – Re Lehman Brothers International (Europe) and Others ChD 14-Mar-2014
On the winding up of the company, there had unexpectedly been a surplus of assets after payment of all debts. The court was now asked to determine claims to be allowed before a distribution was made.
Held: The court made declarations as . .
At CA – LB Holdings Intermediate 2 Ltd, (The Joint Administrators of) and Others v Lomas and Others CA 14-May-2015
Applications after recovery of surplus funds to repay creditors of Lehmann Brothers Ltd. The court had given orders as to the several uses of the surpluses. The parties appealed some elements of those orders.
Held: Most elements were upheld, . .
Cited – Cherry v Boultbee HL 22-Nov-1839
B died having made a will leaving a fund to pay income to A who owed her money but had been made bankrupt before the death. The debt to B remained unpaid.
Held: The liability to pay the debt and the right to receive the legacy had never tested . .
Cited – In re Nortel Companies and Others SC 24-Jul-2013
The court was asked as to the interrelationship of the statutory schemes relating to the protection of employees’ pensions and to corporate insolvency.
Held: Liabilities which arose from financial support directions or contribution notices . .
Cited – In re Kaupthing Singer and Friedlander Ltd SC 19-Oct-2011
The bank had been put into administrative receivership, and the court was now asked as to how distributions were to be made, and in particular as to the application of the equitable rule in Cherry v Boultbee in the rule against double proof as it . .
Cited – Bloom and Others v The Pensions Regulator (Nortel, Re) ChD 10-Dec-2010
Applications for directions by the administrators of twenty companies in two groups, all raising the same common questions as to the effect of the Financial Support Direction regime created by the Pensions Act 2004 upon companies in administration . .
Cited – Belmont Park Investments Pty Ltd v BNY Corporate Trustee Services Ltd and Another SC 27-Jul-2011
Complex financial instruments insured the indebtedness of Lehman Brothers. On that company’s insolvency a claim was made. It was said that provisions in the documents offended the rule against the anti-deprivation rule. The courts below had upheld . .
Cited – Gooch v London Banking Association ChD 1886
On the application of a landlord, the court had jurisdiction to restrain the liquidators of a solvent company in voluntary liquidation from distributing assets of the company amongst its shareholders, without setting aside sufficient assets to . .
Cited – In re Fine Industrial Commodities Ltd ChD 1956
The Court considered the payment of interest to simple contract creditors. The company had been wound up on the ground of insolvency. In the course of the winding up the liquidators brought an action to set aside a debenture. The action was . .
Cited – Mitchell v Carter, In re Buckingham International Ltd CA 1977
The making of a winding-up order ‘divests the company of the beneficial ownership of its assets’, and those assets become ‘subject to a statutory scheme for distribution among the creditors and members’, who have the right to have them administered . .
Cited – In re T and N Ltd and Others, Re Insolvency Act 1986 ChD 14-Dec-2005
The court considered the case of Glenister and similar and said: ‘I accept the submission that these cases are not in point to the issue as regards future asbestos claims. There is no element of discretion as regards such claims. If the ingredients . .
Cited – HIH Casualty and General Insurance Limited and others v Chase Manhattan Bank and others HL 20-Feb-2003
The insurance company had paid claims on policies used to underwrite the production of TV films. The re-insurers resisted the claims against them by the insurers on the grounds of non-disclosure by the insured, or in the alternative damages for . .
Cited – In re Islington Metal and Plating Works Ltd ChD 1983
Section 30 of the 1914 Act provided that ‘demands in the nature of unliquidated damages … shall not be provable in bankruptcy’. Tort claims were therefore excluded as provable debts by the express wording of the Act. . .
Cited – In Re Buckingham International Plc ChD 20-Nov-1997
There is no power in the court to make any arrangement which will result in the preference of one set of creditors over others of the same class. . .
Cited – In re Lines Bros Ltd CA 1982
The liquidators in a creditors voluntary liquidation converted foreign currency debts of the company into Sterling at the rate of exchange prevailing at the date of the resolution to wind up. As a result of the depreciation of Sterling against the . .
Cited – In re Humber Ironworks and Shipbuilding Co 1869
The assets of a company held on the statutory trusts should be distributed as if they had all been collected and distributed on the date of the winding up order: ‘I think the tree must lie as it falls; that it must be ascertained what are the debts . .
Cited – Ex parte Mackay; Ex parte Brown; In re Jeavons 1873
Mr Jeavons sold a patent regarding the manufacture of armour plates to a Brown and Co and Cammell and Co in consideration of the companies paying royalties. There was also a loan from the company to Mr Jeavons secured on the royalties. The parties . .
Cited – In re Pyle Works CA 1890
The court was asked about a mortgage of the uncalled amounts on some partly paid shares and all the present and future property of the company. The issue was whether the mortgages extended to the calls to be made by the liquidator in the winding up . .
Cited – Parmalat Capital Finance Ltd and others v Food Holdings Ltd and Another PC 9-Apr-2008
(the Cayman Islands) Lord Hoffmann said that ‘a winding up order does not affect the legal rights of the creditors or the company’. . .
Cited – Financial Services Compensation Scheme Ltd v Larnell (Insurances) Ltd CA 29-Nov-2005
The claimant investors said that their financial adviser, the defendant insolvent company, had given them negligent advice. The action was brought as a preliminary to claiming against the defendant’s insurers under the 1930 Act, in the way made . .
Cited – Barclays Bank Ltd v Quistclose Investments Ltd; etc HL 31-Oct-1968
R Ltd were in serious financial difficulties. The company’s overdraft with the appellant bank was almost twice its permitted limit. The company sought a loan of 1 million pounds from a financier, who was willing to lend the company that sum provided . .
Cited – Wight, Pilling, Mackey v Eckhardt Marine GmbH PC 14-May-2003
(Cayman Islands) An international bank went into liquidation in the Cayman Islands, with liabilities in Bangladesh. A new bank was created in Bangladesh, and the applicants sought to make the new bank liable, and through them the liquidators.
Cited – Inco Europe Ltd and Others v First Choice Distributors (A Firm) and Others HL 10-Mar-2000
Although the plain words of the Act would not allow an appeal to the Court of Appeal under the circumstances presently applying, it was clear that the parliamentary draftsman had failed to achieve what he had wanted to, that the omission was in . .
Cited – Miliangos v George Frank (Textiles) Ltd HL 1975
The issue was whether an English court was able to award damages in Sterling only.
Held: The House distinguished clearly between the substance of the debtor’s obligations and the effect of English procedural law when a debt in a foreign . .
Cited – Inco Europe Ltd and Others v First Choice Distribution (A Firm) and Others CA 10-Sep-1998
The Court of Appeal has jurisdiction to hear an appeal against a judge’s grant or refusal of an order staying court proceedings where arbitration was sought by one party under an agreement. . .
Cited – In re Dynamics Corporation of America ChD 1976
In a compulsory winding up of an insolvent company, a creditor’s claim for a debt in a foreign currency, and any set-off in a foreign currency against such a debt, must be converted into sterling as at the date of the winding up order. The result . .
Cited – Beaufort Developments (NI) Limited v Gilbert-Ash NI Limited and Others HL 26-Feb-1998
The contractual ability given to an arbitrator under standard JCT terms did not oust the court from assessing and prejudging the acts of the architect under a building contract. As to the means for interpreting documents, Lord Hoffmann said: ‘I . .
Cited – In re Whitehouse and Co CA 1878
The Court was asked whether a contributory was entitled to set off a debt due to him from the company against calls made against him both by the company before the commencement of its liquidation and by the liquidator after the commencement of its . .
Cited – Whittaker v Kershaw CA 1890
A company contributory has no liability until the company concerned is wound up. . .
Cited – In re MC Bacon Ltd (No2) ChD 1991
A claim was made by the liquidator for reimbursement, out of a fund in the hands of a secured creditor, of costs, which included costs the liquidator had been ordered to pay the secured creditor following the dismissal of the action in which he . .
Cited – In re Ayala Holdings Ltd (No 2) ChD 1996
The Court was asked as to an assignment to a creditor of all rights to and choses in action relating to or in any way arising out of or in connection with an action against a secured creditor. The rights purportedly assigned included the right to . .
Cited – Bank of Credit and Commerce International Sa (In Liquidation) (No 8) CA 2-Oct-1996
Not all debts which were eligible for proof in bankruptcy were also eligible for a set off.
Rose Ljexplained the doctrine of equitable marshallling, saying: ‘The doctrine of marshalling applies where there are two creditors of the same debtor, . .
Cited – Gye v McIntyre 1-Mar-1991
High Court of Australia – Bankruptcy – Proof of debts – Set-off – Mutual dealings – Composition with creditors – Person claiming to prove debt . .
Cited – Graham and Others, Assignees of Leigh, Bankrupt v Russell 25-Nov-1816
An underwriter, in an action by the assignees of a bankrupt assured, upon a loss which happened after the bankruptcy, may set off a sum due to him for premiums on the balance of accounts between the bankrupt and himself. . .
Cited – Forster v Wilson 1843
English law regards insolvency set off as a way of achieving substantial justice between the parties. . .
Cited – Stein v Blake HL 18-May-1995
Where A and B each have claims against each other and A is insolvent, the common amount is set off, and the net difference remains as a debt due.
Hoffmann L said: ‘It is a matter of common occurrence for an individual to become insolvent while . .
Cited – Cherry v Boultbee CA 6-Apr-1838
TB was indebted to CB, his sister, in the sum of andpound;1878. He became bankrupt, and shortly after his bankruptcy C B made her will, giving legacies of andpound;500 and andpound;2,000 to her executors, in trust to pay the interest thereof (as to . .
Cited – Cherry v Boultbee HL 22-Nov-1839
B died having made a will leaving a fund to pay income to A who owed her money but had been made bankrupt before the death. The debt to B remained unpaid.
Held: The liability to pay the debt and the right to receive the legacy had never tested . .
Cited – In re Overend Gurney and Co (Grissell’s case) 1866
On the insolvency of a company, no cross claim may be set off against the company member’s liability for unpaid capital, for debt. Lord Cheldmsford LC said: ‘If the amount of an unpaid call cannot be satisfied by a set-off of an equivalent portion . .
Cited – Oakes v Turquand hL 1867
Lord Chelmsford said: ‘it is said that everything that is stated in the prospectus is literally true, and so it is; but the objection to it is, not that it does not state the truth as far as it goes, but that it conceals most material facts with . .
Cited – Cambridge Gas Transport Corp v Official Committee of Unsecured Creditors (of Navigator Holdings Plc and Others) PC 16-May-2006
(Isle of Man) A scheme of arrangement was proposed for a company with involvement in several jurisdictions. An order in New York sought assistance in the vesting of shares and assets in the Isle of Man in the creditors committee. Cambridge was a . .
Cited – In re Abrahams ChD 1908
A debt was owed by the beneficiary to the estate which was payable by way of future instalments which were not due.
Held: The debt did not entitle the executors to hold back distribution of the beneficiary’s share of the estate. . .

Cited by:
Cited – MT Hojgaard As v EON Climate and Renewables UK Robin Rigg East Ltd and Another SC 3-Aug-2017
The defendants had requested tenders for the design and construction of an offshore wind farm. The court now considered the situation arising because of inconsistencies between documents in the tender request. The successful tender was based upon an . .
Cited – Revenue and Customs v Joint Administrators of Lehman Brothers International (Europe) SC 13-Mar-2019
The Court was asked whether interest payable under rule 14.23(7) of the Insolvency Rules 2016 is ‘yearly interest’ within the meaning of section 874 of the Income Tax Act 2007. If so, the administrators must deduct income tax before paying interest . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 17 January 2022; Ref: scu.584116

Galbraith v Grimshaw: HL 23 Jun 1910

The appellant was a trustee in a Scottish sequestration. The respondents, who were judgment creditors of the bankrupt, had attached by a garnishee order an English debt due to the bankrupt. This security, being obtained less than sixty days before the date of the Scottish sequestration, would have been thereby cut down had it taken the form of letters of arrestment of a Scottish debt.
The Scottish trustee contested the effect of the garnishee order, and judgment against him was pronounced by the Court of Appeal (Farwell, Buckley, and Kennedy, L.JJ.). The trustee appealed.
Held: A foreign bankruptcy is recognised only from its date, and does not cut down security rights obtained before that date, although they would be cut down by the law of the foreign bankruptcy.

Lord Chancellor (Loreburn), Lords Macnaghten, James of Hereford, and Dunedin
[1910] UKHL 699, 48 SLR 699
Bailii
England and Wales

Insolvency

Updated: 13 January 2022; Ref: scu.619793

Bilta (Uk) Ltd v Nazir and Others: ChD 24 Nov 2010

The company had been wound up by the Revenue on the basis that it had been used for a substantial VAT fraud. The liquidators now sued those said to have participated. A defendant denied the jurisdiction because of a disputed arbitration agreement. The claimant sought to have the defence struck out on the basis that documents had been destroyed by the defendant.
Held: The applications generally failed.

Lewison J
[2010] EWHC 3227 (Ch)
Bailii
England and Wales
Citing:
See Also – Bilta (UK) Ltd (In Liquidation) v Nazir and Others ChD 17-May-2010
The sixth defendant resisted a claim against it saying that matters between them were governed by a framework agreement which provided for matters to be resolved by arbitration. The claimant resisted, denying the arbitration agreement and saying . .
Cited – Logicrose Ltd v Southend United Football Club Ltd CA 5-Feb-1988
The agent required the contractual counterparty to pay a bribe of pounds 70,000 to an offshore account.
Held: The bribe was held to be recoverable by the principal whether the principal rescinded or affirmed the contract because it was a . .
Cited – Landaur Limited v Cummings and Co 4-May-1991
An inadvertent destruction of documents may have the same consequences visited on the party as a deliberate destruction. . .
Cited – Arrow Nominees Inc and Another v Blackledge and Others CA 22-Jun-2000
A petition had been lodged alleging unfair prejudice in the conduct of the company’s affairs. The defendants alleged that when applying for relief under section 459, the claimants had attempted to pervert the course of justice by producing forged or . .
Cited – Woodhouse v Consignia Plc; Steliou v Compton CA 7-Mar-2002
The claimant continued an action brought in her late husband’s name. The action had begun under the former rules. After the new rules came into effect, the action was automatically stayed, since no progress had been made for over a year. Her . .
Cited – Douglas, Zeta-Jones, Northern and Shell Plc v Hello! Ltd, Hola Sa, Junco, The Marquesa De Varela, Neneta Overseas Ltd, Ramey ChD 27-Jan-2003
The claimants sought an order striking out the defendants’ defence on the grounds that, by destroying documents, the possibility of a fair trial had been prejudiced.
Held: Refusing the order, save as to certain paragraphs of the defence, the . .

Cited by:
See Also – Bilta (UK) Ltd and Others v Nazir and Others ChD 30-Jul-2012
The company was said to have engaged in a fraud based on false European Trading Scheme Allowances, and had been wound up by the Revenue. The liquidators, in the company name, now sought recovery from former directors and associates.
Held: The . .
At first instance (2) – Jetivia Sa and Another v Bilta (UK) Ltd and Others CA 31-Jul-2013
Defendants appealed against refusal of their request for a summary striking out for lack of jurisdiction, of the claims against them arising from their management of the insolvency of the first defendant. . .
At first Instance (2) – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Litigation Practice

Updated: 10 January 2022; Ref: scu.560327

Grant and Another v Ralls and Others (Re Ralls Builders Ltd): ChD 11 Feb 2016

Action by Liquidator against directors for wrongful trading. The court was asked Whether the liquidators had established continued trading causing a loss to company in order to attribute personal liability on the directors.
Held: Section 214(3) was intended to impose a high hurdle on the directors, being construed strictly it would require a director seeking to rely on that the defence to show not only that continued trading was intended to reduce the net deficiency of the company, but also that it was designed appropriately so as to minimise the risk of loss to individual creditors. If not, then a director could make out the defence under section 214(3) by claiming that he traded on with a view to reducing the overall deficiency by creditors as a general body, irrespective of how he achieved that result as between creditors.

Snowden J
[2016] EWHC 243 (Ch), [2016] 1 Costs LR 185, [2016] BCC 293, [2016] WLR(D) 69, [2016] Bus LR 555
Bailii, WLRD
Insolvency Act 1986 214
England and Wales

Insolvency

Updated: 10 January 2022; Ref: scu.560087

Stichting Shell Pensioenfonds v Krys and Another: PC 26 Nov 2014

(British Virgin Islands- Eastern Caribbean Court of Appeal) The defendant pension funds appealed againat an order allowing the respondent liquidators’ appeal against the refusalof an anti-suit injunction to restrain the now appellants pursuing an action in the Netherlands.
Held: The appeal failed. No principle existed to refuse an anti-suit injunction on the basis that the proceedings were to take place in the foreign party’s own jurisdiction.
Lord Toulson said: liquidator and ultimately by the court according to its merits and satisfied according to the rules of distribution if it is admitted.’

Lady Hale, Lord Clarke, Lord Wilson, Lord Sumption, Lord Toulson
[2014] UKPC 41, [2015] 2 WLR 289, [2015] 1 BCLC 597, [2015] BCC 205, [2014] WLR(D) 516, [2015] 2 All ER (Comm) 97, [2015] AC 616
Bailii, WLRD
England and Wales

Insolvency

Updated: 08 January 2022; Ref: scu.539287

Barclays Bank Plc (T/A Barclays Global Payment Acceptance) v The Registrar of Companies and Others: ChD 7 Oct 2015

The court was asked: ‘ what steps (if any) are open to a creditor to get in additional assets belonging to a dissolved company that was formerly in administration. In particular is it open to the creditor (a) to restore the company to the register (b) then to seek a winding up order and (c) as part of that application to ask for the winding up petition to be treated as presented as at some earlier date?’

[2015] EWHC 2806 (Ch)
Bailii
England and Wales

Insolvency, Company

Updated: 04 January 2022; Ref: scu.553114

Horton v Henry: ChD 17 Dec 2014

The trustee in bankruptcy sought to oblige the bankrupt to make a capital draw on pension fund assets in order to support an Income Payment Order.
Held: The judge dismissed the application for an IPO. The court had no power under section 310 of the 1986 Act to make an income payments order in respect of an uncrystallised pension not yet in payment: i) the word ‘entitled’ in section310(7) of the Insolvency Act suggested a reference to a pension in payment under which definite amounts had become contractually payable;
ii) there was no obvious wording in section 310 of the Insolvency Act which would give the Court power to decide how a bankrupt was to exercise the different elections open to him under an uncrystallised SIPP or personal pension; nor was there any obvious route for a trustee in bankruptcy to be said to have the power;
iii) that interpretation was supported by various commentaries, in particular the Report of the Pension Law Review Committee (Cm 2342-I), the Explanatory Notes to the WRPA and the Insolvency Service’s guidance notes as they were prior to Raithatha.
If, contrary to his decision, he had jurisdiction to make an IPO in respect of the pension entitlement, on the facts of this case, it would have been appropriate to make an IPO to the full extent claimed because, on the respondent’s own evidence, none of the moneys were needed for meeting his reasonable domestic needs or those of his family.

Englehart QH
[2014] EWHC 4209 (Ch), [2015] 1 WLR 2488, [2014] WLR(D) 551, [2015] BPIR 313, [2015] Pens LR 59
Bailii, WLRD
Insolency Act 1986 310
England and Wales
Citing:
Not followed – Raithatha v Williamson ChD 4-Apr-2012
A bankrupt’s present entitlement to compel payment of pension benefits fell to be included in the assessment of his income within the meaning of section 310(7) of the Insolvency Act. . .

Cited by:
Cited – Horton v Henry CA 7-Oct-2016
No obligation on bankrupt to draw on pension fund
The trustee in bankruptcy appealed against a decision dismissing his application for an income payments order pursuant to section 310 of the 1986 Act in respect of income which might become payable to the respondent from his personal pension . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 27 December 2021; Ref: scu.541761

Trillium (Nelson) Properties Ltd v Office Metro Ltd: ChD 9 May 2012

Winding-up petition in which the principal issue is whether or not Office Metro Limited can be wound up in this jurisdiction in the light of the fact that, despite its being an English registered company, its centre of main interest is in Luxembourg. The question which was to be determined was whether or not it had an ‘establishment’ in this country for the purposes of the Insolvency Regulation.
Mann J explained what amounted to economic activity within the meaning of the Regulation: ‘ However, I do not think that it amounts to economic activity within the meaning of the Regulation. By the time of the petition it seems that the only ‘activity’ (and I deliberately put it in inverted commas) was to sit there being liable on guarantees, sometimes paying out on them, and perhaps doing whatever else was necessary to keep itself alive in terms of compliance with formalities such as company filings. Mr Wetheral (or perhaps his staff) occasionally sought legal or accounting advice, but there is no evidence it was doing anything else. Being in a state of liability, with the need sometimes to pay out on that liability and take a bit of advice, is not an economic activity for the purposes of the Regulation. Neither is seeking accounting or legal assistance on other matters. Forwarding post (which is said to have happened at Chertsey) is not an economic activity carried on there. It is something which goes on so that someone can carry it on somewhere else. Utilising the guidance given in the Virgos-Schmit report, it is not conducting activities on the market.
The activities necessary for compliance (filing and so on) are not, apparently, carried out at the Chertsey office. They are therefore not carried out at the only candidate for a place of operations.
Even if I am wrong as to whether Office Metro’s residual activities are economic activity for the purposes of the Regulation, I do not consider that they are non-transitory. They are not a consistent activity. The activities involved in paying up on guarantees do not have the character of a consistent business or business-type activity. They arise as and when needed, and were all going well in the underlying group they would not arise at all. The concept of ‘establishment’ is the one chosen as the touchstone of sufficient presence to justify the opening of insolvency proceedings. There are three ingredients for these purposes: (i) a place where things happen, and (ii) sufficient things (iii) of sufficient quality happening there. The concept of non-transitoriness goes to the third of them. In my view the converse of something being transitory is not confined merely to things which are ‘fleeting’ (to use one English synonym) but is also intended to encapsulate such things as the frequency of the activity; whether it is planned or accidental or uncertain in its occurrence; the nature of the activity; and the length of time of the activity itself. When measured against all these elements I consider that the activities of procuring payment on the guarantees is transitory (or not non-transitory) for the purposes of the Regulation. This is to a large extent a value judgment in respect of which one cannot be prescriptive of the elements to be fulfilled (or not fulfilled), but in my view it is plain that if the activities were otherwise economic activities they would, for these purposes, be ‘transitory’ for the purposes of the Regulation.’

Mann J
[2012] EWHC 1191 (Ch), [2012] ILPr 30, [2012] BCC 829, [2012] BPIR 1049
Bailii
EU Regulation 1346/2000 3
England and Wales
Cited by:
Cited – Olympic Airlines Sa Pension and Life Assurance Scheme v Olympic Airlines Sa ChD 29-May-2012
Olympic Airlines, incorporated in Greece, but with headquarters in London, went into liquidation. The pensions scheme had been run with a deficit. The trustees no sought the winding up of the company under British law.
Held: To be an . .
Cited – Olympic Airlines Sa Pension and Life Insurance Scheme v Olympic Airlines Sa CA 6-Jun-2013
The court considered the the jurisdiction under EU law to commence a secondary winding-up in England of a company whose main liquidation is taking place in Greece. That depended upon whether the company, registered in Greece had a sufficient . .
Cited – Olympic Airlines Sa Pension and Life Assurance Scheme, The Trustees of The v Olympic Airlines Sa SC 29-Apr-2015
The airline was incorporated in Greece but with an office in the UK. It became insolvent leaving a deficit in the UK employee pension scheme. The trustees of the fund sought a secondary insolvency within the UK, and now a reference to the European . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Jurisdiction

Leading Case

Updated: 23 December 2021; Ref: scu.457573

Crawford v Dunlop and Another: CANI 20 Feb 2014

The court was asked ‘When does a director and shareholder of a company fall to be treated as an ’employee’ of the company for the purposes of redundancy and insolvency payments from the National Insurance Fund administered by the Department of Employment and Learning?’

Girvan LJ Coghlin LJ and Weatherup J
[2014] NICA 26
Bailii
Northern Ireland

Employment, Insolvency, Taxes – Other

Updated: 16 December 2021; Ref: scu.534050

Bilta (UK) Ltd and Others v Nazir and Others: ChD 30 Jul 2012

The company was said to have engaged in a fraud based on false European Trading Scheme Allowances, and had been wound up by the Revenue. The liquidators, in the company name, now sought recovery from former directors and associates.
Held: The court dismissed the application: ‘First, the fact that there is, in accordance with my conclusions, a claim against these defendants both at common law and under s.213 Insolvency Act 1986 is no reason for extending the defence of ex turpi causa so as to provide a defence to the claim by Bilta. There will be cases in which a company is defrauded to the detriment of creditors but is not being wound up. Second, there is no risk of any of the malefactors, such as Mr Chopra, benefitting from any judgment Bilta or the Liquidators may obtain. The claim under s.213 necessarily gives rise to the discretion of the court under s.213(2). Any damages or specific relief granted in respect of Bilta’s claim can be limited and directed to the creditors’

Sir Andrew Morritt Ch
[2012] STC 2424, [2012] EWHC 2163 (Ch), [2012] WLR(D) 236, [2013] 2 WLR 825, [2013] 1 All ER 375, [2013] BCC 235, [2012] STI 2554
Bailii
Insolvency Act 1986 213, Companies Act 2006 172 180
England and Wales
Citing:
See Also – Bilta (UK) Ltd (In Liquidation) v Nazir and Others ChD 17-May-2010
The sixth defendant resisted a claim against it saying that matters between them were governed by a framework agreement which provided for matters to be resolved by arbitration. The claimant resisted, denying the arbitration agreement and saying . .
See Also – Bilta (Uk) Ltd v Nazir and Others ChD 24-Nov-2010
The company had been wound up by the Revenue on the basis that it had been used for a substantial VAT fraud. The liquidators now sued those said to have participated. A defendant denied the jurisdiction because of a disputed arbitration agreement. . .
Cited – Moore Stephens (A Firm) v Stone Rolls Ltd (in liquidation) HL 30-Jul-2009
The appellants had audited the books of the respondent company, but had failed to identify substantial frauds by an employee of the respondent. The auditors appealed a finding of professional negligence, relying on the maxim ex turpi causa non . .
Cited – Greener Solutions Ltd v Revenue and Customs FTTTx 26-Aug-2010
FTTTx INPUT TAX – MTIC fraud – whether agent’s knowledge attributed to company – no – whether company should have known of connection to fraud – no – appeal allowed . .
Cited – HMRC v Greener Solutions UTTC 18-Jan-2012
UTCC INPUT TAX – MTIC fraud – whether agent’s knowledge attributed to company – yes-appeal allowed
Greener Solutions sought repayment of the input tax incurred in respect of mobile telephones it had bought . .
Cited – West Mercia Safetywear Ltd v Dodds CA 1988
If a company continues to trade whilst insolvent but in the expectation that it would return to profitability, it should be regarded as trading not for the benefit of the shareholders, but for the creditors also. If there is a possibility of . .
Cited – Masri v Consolidated Contractors International Co Sal and Others HL 30-Jul-2009
The claimant sought to enforce a judgment debt against a foreign resident company, and for this purpose to examine or have examined a director who lived abroad. The defendant said that the rules gave no such power and they did, the power was outside . .
Cited – Ex parte Blain; In re Sawers CA 1-Aug-1879
Where legislation regulates the conduct of an individual, it may be so construed as to limit it to conduct by United Kingdom citizens anywhere.
James LJ referred to ‘broad, general, universal principle that English legislation, unless the . .
Cited – In re Seagull Manufacturing Co Ltd ChD 1992
The court considered the power of an English court over a foreign resident under section 133.
Held: In contrast with the private examination provisions, on its true construction section 133 applies to those who are within the class of persons . .
Cited – Re Paramount Airways Ltd (In Administration) CA 8-Apr-1992
It was said that there had been a transction at an undervalue within section 238. It was given effect by a transfer to a bank in Jersey, from which recovery was no sought. The bank claimed that the section did not have extra-territorial effect.
Cited – HM Revenue and Customs v Begum and Others ChD 15-Jul-2010
The Commissioners claim was founded in an alleged conspiracy from a ‘missing trader intra-community fraud’ amounting to andpound;96 million.
Held: Section 423 had extra territorial effect. . .
Cited – Re International Tin Council ChD 1987
An order for the winding up of a foreign company operates universally, applies to all the foreign company’s assets and brings into play the full panoply of powers and duties under the Insolvency Act 1986 like any other winding up order. Millett J . .
Cited – Re Howard Holdings Inc ChD 1998
It is difficult to envisage any developed system of corporate law which does not impose some obligation on directors to consider whether the company is solvent and, if not, to consider what should be done about it.
Chadwick J said: ‘I accept . .
Cited – Carman v The Kronos Group SA 2006
The court acted on the basis that section 213 of the 1996 Act had extra-territorial effect. . .

Cited by:
Appeal from – Jetivia Sa and Another v Bilta (UK) Ltd and Others CA 31-Jul-2013
Defendants appealed against refusal of their request for a summary striking out for lack of jurisdiction, of the claims against them arising from their management of the insolvency of the first defendant. . .
Appeal from – Jetivia Sa and Another v Bilta (UK) Ltd and Others SC 22-Apr-2015
The liquidators of Bilta had brought proceedings against former directors and the appellant alleging that they were party to an unlawful means conspiracy which had damaged the company by engaging in a carousel fraud with carbon credits. On the . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 10 December 2021; Ref: scu.463317

Olympic Airlines Sa Pension and Life Assurance Scheme v Olympic Airlines Sa: ChD 29 May 2012

Olympic Airlines, incorporated in Greece, but with headquarters in London, went into liquidation. The pensions scheme had been run with a deficit. The trustees no sought the winding up of the company under British law.
Held: To be an establishment for the purposes of the Insolvency Regulation the following qualities must be present on the date the petition was presented:
(1) a place of operations, at which –
(2) the company carries out an activity which is:
(a) economic, and
(b) non-transitory,
(3) with
(a) human means, and
(b) assets. OA satisfied each of those conditions.

Sir Andrew Morritt Ch
[2012] EWHC 1413 (Ch)
Bailii
Insolvency Act 1986, Pensions Act 1995, Council Regulation (EC) 1346/2000
England and Wales
Citing:
Cited – Staubitz-Schreiber (Area of Freedom, Security and Justice) ECJ 17-Jan-2006
ECJ Judicial cooperation in civil matters – Insolvency proceedings – Regulation (EC) No 1346/2000 – Temporal application – Court having jurisdiction . .
Cited – Interedil Srl, in liquidation v Fallimento Interedil Srl, Intesa Gestione Crediti SpA ECJ 20-Oct-2011
interedill2ECJ2011
ECJ Reference for a preliminary ruling – Whether a lower court has the power to refer a question to the Court for a preliminary ruling – Regulation (EC) No 1346/2000 – Insolvency proceedings – International . .
Cited – Trillium (Nelson) Properties Ltd v Office Metro Ltd ChD 9-May-2012
Winding-up petition in which the principal issue is whether or not Office Metro Limited can be wound up in this jurisdiction in the light of the fact that, despite its being an English registered company, its centre of main interest is in . .

Cited by:
Appeal from – Olympic Airlines Sa Pension and Life Insurance Scheme v Olympic Airlines Sa CA 6-Jun-2013
The court considered the the jurisdiction under EU law to commence a secondary winding-up in England of a company whose main liquidation is taking place in Greece. That depended upon whether the company, registered in Greece had a sufficient . .
At First Instance – Olympic Airlines Sa Pension and Life Assurance Scheme, The Trustees of The v Olympic Airlines Sa SC 29-Apr-2015
The airline was incorporated in Greece but with an office in the UK. It became insolvent leaving a deficit in the UK employee pension scheme. The trustees of the fund sought a secondary insolvency within the UK, and now a reference to the European . .

Lists of cited by and citing cases may be incomplete.

Insolvency, European, Financial Services, Employment

Updated: 06 December 2021; Ref: scu.459890

Carman v Yates: ChD 2005

When a civil judge thinks a witness may be lying, he should remember that witnesses may have different reasons for lying, and effectively give himself a Lucas direction.

Charles J
[2005] BPIR 476
England and Wales
Citing:
Cited – Regina v Lucas (Ruth) CACD 1981
People sometimes tell lies for reasons other than a belief that they are necessary to conceal guilt.
Four conditions were identified which must be satisfied before a defendant’s lie could be seen as supporting the prosecution case:-
(1) . .

Cited by:
Cited – Hill (As Trustee In Bankruptcy of Nurkowski) v Spread Trustee Company Ltd and Another CA 12-May-2006
The defendants sought relief for transactions entered into at an undervalue. The bankrupt had entered into charges and an assignment of a loan account in their favour before his bankruptcy, and the trustee had obtained an order for them to be set . .

Lists of cited by and citing cases may be incomplete.

Insolvency, Litigation Practice

Updated: 06 December 2021; Ref: scu.242122

AMP Enterprises Ltd v Hoffman and Another: ChD 25 Jul 2002

A creditor sought an order to replace the company liquidator.
Held: Such orders were discretionary, but courts should not grant them too readily. It was for the applicant to show good reason for the order. The circumstances would vary widely, and the court should not try to delimit the kind of situations where an application would succeed. Nevertheless a liquidator might be removed where he had failed to act vigorously, or had a perceived bias in favour of one section of creditors. Where a liquidator was subject to proper criticism, a court might be ready to order his removal. The court must also bear in mind the consequences in cost and delay of removal. This liquidator should not be removed. ‘In an application such as this, the court may have to carry out a difficult balancing exercise. On the one hand the court expects any liquidator, whether in a compulsory winding up or a voluntary winding up, to be efficient and vigorous and unbiased in his conduct of the liquidation, and it should have no hesitation in removing a liquidator if satisfied that he has failed to live up to those standards at least unless it can be reasonably confident that he will live up to those requirements in the future. . . On the other hand, if a liquidator has been generally effective and honest, the court must think carefully before deciding to remove him and replace him. It should not be seen to be easy to remove a liquidator merely because it can be shown that in one, or possibly more than one, respect his conduct has fallen short of ideal. Otherwise, it would encourage applications under s108 (2) by creditors who have not had their preferred liquidator appointed, or who are for some other reason disgruntled. Once a liquidation has been conducted for a time, no doubt there can almost always be criticism of the conduct, in the sense that one can identify things that could have been done better, or things that could have been done earlier. It is all too easy for an insolvency practitioner, who has not been involved in a particular liquidation, to say, with the benefit of the wisdom of hindsight, how he could have done better. It would plainly be undesirable to encourage an application to remove a liquidator on such grounds. It would mean that any liquidator who was appointed, in circumstances where there was support for another possible liquidator, would spend much of his time looking over his shoulder, and there would be a risk of the court being flooded with applications of this sort. Further, the court has to bear in mind that in almost any case where it orders a liquidator to stand down, and replaces him with another liquidator, there will be undesirable consequences in terms of costs and in terms of delay. ‘

Mr Justice Neuberger
Times 13-Aug-2002, Gazette 19-Sep-2002, [2002] EWHC 1989 (Ch)
Insolvency Act 1986 108(2)
England and Wales
Citing:
Followed – In re Keypak Homecare Ltd ChD 1987
The court considered an application under section 108 to remove the liquidator, and reviewed the case law on the topic: ‘The section authorises the court to remove the liquidator ‘on cause shown’. That is not the same as saying ‘if the court shall . .

Cited by:
Cited – Quickson (South and West) Limited v Stephen Mark Katz, John Stephen Kelmanson (As Joint Liquidators of Buildlead Limited) ChD 25-Aug-2004
Various applications were made in the insolvency, including for removal of the liquidators and declarations that certain payments were a fraudulent preference on the creditors.
Held: No prejudice had been shown by any procedural irregularity. . .

Lists of cited by and citing cases may be incomplete.

Insolvency

Updated: 06 December 2021; Ref: scu.174700

The Funding Corporation Block Discounting Ltd v Lexi Holdings Plc: ChD 8 May 2008

The claimant sought a particular interest in the proceeds of sale of assets in the insolvent company, saying that they held equitable charges over the properties.

Briggs J
[2008] EWHC 985 (Ch), [2008] 2 BCLC 596, [2008] NPC 57
Bailii
Insolvency Act 1986 43(6)(b)
England and Wales

Insolvency

Updated: 06 December 2021; Ref: scu.267559