Insolvency & Restructuring

Major success in a 3-week Commercial Court trial of claims against a former director for fraudulent breaches of statutory duty, and against an alleged nominee for dishonest assistance. Defeated limitation and laches defences. Claim was for in excess of £100m.

Whether the English court can grant assistance to a Russian bankruptcy trustee in respect of immovable property situate in England and whether a Russian bankrupt can oppose recognition of his bankruptcy order on the grounds that he wishes to re-litigate in England the question whether the petitioning creditor’s Russian judgment debt was obtained by fraud

Acting for the liquidators on a summary judgment application arising from a multimillion pound labour supply fraud committed by an umbrella payroll company, which deducted VAT, PAY and NICs and then submitted false returns to conceal the true position. The directors then extracted substantial sums from the company which should have been paid over to HMRC. HMRC’s claim in the liquidation totals about £36 million. Some of the money was traced into bank accounts and some used to acquire numerous properties through a network of companies. At the outset the Company obtained freezing and proprietary orders. The Company sought summary judgment against some of the Defendants arising out of its claims for breach of fiduciary duty, dishonest assistance and knowing receipt. Following a two-day hearing the Judge ruled in favour of the Claimant and found that that there was no real prospect of the Defendants successfully defending the breach of duty and knowing receipt claims. He ordered judgment with damages/equitable compensation to be assessed and substantial interim payments. The court also made declarations that 19 properties and a bank account held in the name of the Defendants were held on constructive trust for the Claimant and made an order requiring the bank to pay the money direct to the Claimant.

On an application by a liquidator the court held that it was just and equitable that the costs incurred by company liquidators in identifying, preserving and realising the interests of purchasers who had paid reservation fees and substantial deposits for units in unbuilt student accommodation be deducted from the proceeds of sale before they were divided between the company and the purchasers under the jurisdiction in Berkeley Applegate (Investment Consultants) Ltd (No.3), Re (1989) 5 B.C.C. 803.

Acting for the liquidator of Microcredit Limited. The court held that there was an insufficient basis justifying his removal the removal of a liquidator. However, the appointment of an additional liquidator was warranted for the limited purpose of considering dispassionately the prospects of an appeal against one creditor's claim in the liquidation.

Dismissal of winding up petition on application of Coronavirus test in Schedule 10 CIGA 2020 and considering relevant date for assessment of test.

Whether discharged bankrupts have standing to challenge transactions entered into by their trustee in bankruptcy on grounds that they were unlawful and without authority and whether bidders in a bidding competition conducted by liquidators as officers of the court have standing to challenge the resulting sale on grounds that the bidding was rigged and the process was unfair

Resisted the debtor's application to strike out a bankruptcy petition by arguing that the debtor was estopped, by virtue of the doctrine of contractual estoppel, from seeking to dispute the petition debt (on the alleged basis that the default interest in the facility agreement arguably amounted to a penalty clause, or could be the subject of the Consumer Credit Act 1974 protections) in light of the fact that the debtor had previously raised these points with the petitioner and then entered into settlement agreements which recited the total amount which was agreed as being due under the facility, and agreed that the petitioner would be entitled to present a bankruptcy petition for that sum if the debtor breached the terms of the conditional settlements.

Acted for a group of successful investors in the latest case about administrations of companies being used to raise funds from investors to renovate property in return for the grant of leases of individual rooms within the property.

Whether accounting journal entries constituted/evidenced a transaction at an undervalue and whether a witness statement of the applicant liquidator had any evidential status at trial.

Applications within insolvency proceedings relating to the ownership of emails, raising questions of confidentiality and privacy rights.

Liquidator claiming recovery of assets on the basis that they were not properly authorised and/or transferred away from the company in anticipation of an adverse outcome of environmental claims against it.

Acted for the Claimant in a claim arising from the sale of complex interest rate derivatives to a property management company, including a claim for misrepresentation in relation to LIBOR rigging.

Whether Scotland has exclusive jurisdiction over claims that solicitors based in Scotland acted in breach of fiduciary duty when employed by English administrators of an English company to assess English causes of action.

The managing director of a company had not breached his fiduciary duties to the company under the Companies Act 2006 s.171 and s.172 where he had honestly believed that a novation of the company's contracts would be in the interests of everyone, including its creditors, and he had genuinely, but mistakenly, considered, on the advice of trusted professionals, that signing deeds of release would be the first step in obtaining those novations.

The court varied a freezing injunction to allow an individual to spend up to £1.26 million on the refurbishment of his family home. The amount sought was appropriate and it could not be said that using the money for that purpose depleted the asset to creditors.

A temporary work agency which operated in the construction industry knew or should have known that its transactions with a contracting intermediary were connected with VAT fraud. A winding-up petition against the agency based on a VAT assessment disallowing input tax on grounds of missing trader fraud was allowed to proceed since there was no genuine dispute about a significant part of the debt.

Application for recognition of Singaporean moratorium under the Cross Border Insolvency Regulations 2006.

Where a bankrupt had entered into transactions at an undervalue in the form of gifts of shares to his wife, the appropriate relief was to vest the shares in the trustees in bankruptcy and order the wife to pay a sum equivalent to the dividends that she had received. The primary relief sought by the trustees, namely the value of the shares when they were transferred, would represent over-compensation for the bankrupt's estate.

The court refused to discharge a freezing injunction granted to HMRC against an individual who, through his company, had allegedly evaded VAT and excise duty. If material relating to the liability of a predecessor company, allegedly not disclosed to the judge, had been at the hearing it would have made no difference to the decision. Other alleged non-disclosure was an attempt to undo a serious and protective measure by trawling though material years later. Any delay could not be blamed on HMRC.

A judge had been correct to refuse a debtor's application to set aside a statutory demand which relied on a judgment obtained by the creditor, the judgment having been based on the debtor's liability under a guarantee. Properly construed, the guarantee prevented the creditor from serving a statutory demand to recover the debt due under the guarantee without first obtaining a judgment; it did not prevent the creditor from taking that step once a judgment had been obtained.

Whether section 236(3) Insolvency Act 1986 has extra territorial effect and in the circumstances of the case an order could be made directed to a respondent resident abroad who held the books and records of the company in liquidation.

Claim by Jersey company arising out of a high value golf course development in Scotland. Judgments obtained against Scottish company under the TUV provisions in section 238 Insolvency Act 1986 and against former officers for breach of duty under the Companies (Jersey) Law 1991.

A notice of appointment of administrators which stated the date and time of appointment by reference to the date and time of filing of the notice in court was not defective. Further, a requirement in the company’s articles for the prior written consent of an outside investor had been waived and did not affect the validity of the appointment of the administrators.

Whether accounting journal entries constituted / evidenced a transaction at an undervalue and whether a witness statement of the applicant liquidator had any evidential status at trial.

Whether an assessment of costs on the indemnity basis should be directed after discontinuance at trial of a claim under s.423 of the Insolvency Act 1986.

Led by Stephen Davies QC, Rowena acted for shareholders of a company in administration. The case considered whether the court has power to appoint additional administrators pending trial of an application to remove existing administrators.

Whether administrators or their appointing bank breached duties owed to the company’s creditor, shareholder and guarantor by selling a development property in London’s Canary Wharf at an undervalue.

Administrator’s appointment was valid where Notice of Appointment stated that the appointment was made “on the date and time this notice is filed with the court”.

Whether and if so and to what extent claimant liquidators should be directed to identify their funders and other related information and, if so, on what terms.

Whether and to what extent a corporate customer should be permitted to plead that its bankers were responsible for artificially distressing it.

Whether the right of a bankrupt to exercise rights to draw down lump sum or other payments from his pension could be brought into account on an application for an income payments order.

Whether director guarantors of their company’s debt to its bankers could resist bankruptcy proceedings on the grounds that the bank had entered a joint venture with the company and breached duties owed to the company in that capacity.

Whether and, if so, to what extent, the UK bankruptcy court should allow a bidding process within a court-supervised liquidation plan in Spain to influence UK bankruptcy proceedings.

Whether the court had power to direct a claimant to disclose the existence/identity of any litigation funder, including whether CPR 25.14 was engaged for the purpose of enabling the defendant to apply for security for costs against the funder.

Security for costs; disclosure of identity of third party funder; CPR 25.14; European Convention on Human rights, art 8.

The commercial purpose of a clause in a partnership agreement providing an indemnity to a salaried insolvency practitioner was to protect him against claims against the partnership for which he might be liable as a salaried partner, not to protect him against claims made personally against him.

A claim for breach of warranty of authority brought against a company's firm of solicitors was not made out where the solicitors had ostensible authority to act for the company.

Whether there should be a case management stay of English insolvency proceedings pending determination of proceedings relating to the same subject matter in New York.

Whether liquidators could assess bills of solicitors employed by administrators and whether administrators had the power to agree such bills after they had ceased to be in office.

Whether and, if so, when administrators should be discharged and the terms and manner in which joint liquidators should be permitted to separate their functions between themselves to address conflicts of interest.

Application to remove joint administrators of a group of companies on grounds of conflicts or duty and interest and the management of such conflicts.

Whether a conditional fee agreement provided that a company liquidator was personally liable for fees due in respect of work carried out on behalf of the company or whether liability was not dependent on receipt of sums recovered.

Whether a mortgagee who had discontinued possession proceedings (i) could set off its liability for the mortgagor's costs of the proceedings against sums owed to it by the mortgagor; (ii) could add its own costs or its liability for adverse costs to the mortgage; and (iii) should be liable for costs on the indemnity basis by reference to its purpose in bringing the proceedings.

Acting for the liquidator of a company on a misfeasance claim in successfully obtaining judgment against 3 directors.

The court jailed 3 company directors for 6 months where they had paid away company funds immediately after the appointment of provisional liquidators.

On an appeal by a company for against a winding up order security for costs will not automatically be ordered.

Company directors failed to show that they genuinely believed that the company had a good defence to a winding-up petition or that it was in the company's interests to defend the petition. They were ordered to pay personally the petitioning creditor's costs of the petition and the costs of the company's unsuccessful defence.

Successfully defeating an application to dismiss a winding up petition.

Whether findings in previous High Court proceedings should stand as prima facie evidence against an insolvency practitioner in subsequent professional disciplinary proceedings in circumstances where the insolvency practitioner had not attended the previous earing and claimed to have had no notice that his conduct would be in issue.

Whether solicitors should be ordered to disclose the identity of their client in aid of execution of a default judgment for delivery up of confidential information obtained by a litigation counter-party.

A dispute about the ability of a liquidator to have assessed by the court the legal fees incurred and paid by administrators as predecessor office-holders, raising issues as to the construction of the Insolvency Rules and the extent of the inherent jurisdiction of the court over an insolvent estate.

Whether an unfair prejudice and just and equitable winding-up petition should be struck out where the primary conduct complained of had been remedied.

The nature and effect of the statutory charge on assets to secure payment of administrators' remuneration and expenses and whether the administrators should be permitted to execute a debenture in their favour over the assets of the company.

The court analysed the use to which information obtained on a search and seizure order could be put.

An appeal to the FTT by a taxpayer does not oust the jurisdiction of the court to decide whether a petition debt is genuinely disputed.

Registrar Barber held that a transaction at an undervalue claim against Mr Tehrani’s estate was a claim which was a provable debt in his bankruptcy and granted a stay of the proceedings both against his estate and Mrs Tehrani as a subsequent recipient. This was upheld on appeal [2014] BPIR 1234.

A non-bankrupt wife was not entitled to assert the equity of exoneration where it would be artificial to allow her to take the benefits while simultaneously seeking to enforce the right of exoneration to his disadvantage.

In granting without notice applications for the appointment of provisional liquidators in relation to companies suspected of fraudulent trading, the court summarised the relevant principles to be taken into account.

Following an application to set aside an order appointing provisional liquidators the Court made a personal costs order against the director.

Whether a creditor of a subsidiary company should have permission to commence proceedings to allege that a withdrawal of a letter of support given by its parent company to the board of the subsidiary constituted a transaction defrauding creditors within the meaning of s.423 of the insolvency act 1986.

Successfully defeating a challenge to the appointment of provisional liquidators.

Whether an administrator against whom summary judgment had been entered to pay legal costs under CFA agreements into which he entered as administrator of 2 companies was personally liable under the judgment in the event of insufficiency of assets in the insolvent estates to pay expenses.

Bankruptcy of partners – whether section 285(3)(b) Insolvency Act 1986 required leave to issue professional negligence proceedings against a partnership, where two of the partners were bankrupt. Whether there was jurisdiction to grant retrospective leave or leave nunc pro tunc to commence proceedings against a bankrupt given conflicting authorities of Re Saunders [1997] Ch 60 and Re Taylor [2007] Ch 250.

A dispute as to whether a transaction had been entered into for the statutory purpose under section 423 of the insolvency act 1986 (transactions defrauding creditors).

Guidance from the Court of Appeal as to the test and relevant criteria required to satisfy the court that it is appropriate to appoint a provisional liquidator over a company at the outset of winding up proceedings.

The first case to reach the Court of Appeal on the principles applicable when assessing the remuneration of insolvency office-holders and general guidance given on the practice statement (Ch D: fixing and approval of remuneration of appointees) [2004] BCC 912.

Whether a petitioning bank had made out an arguable case that the statutory preconditions for presenting a bankruptcy petition in section 265(1)(c)(iii) of the insolvency act 1986 had been satisfied.

Directions about valuing 5,000 warranty claims in an administration.

Excise duty inward diversion fraud. In considering whether to continue a world-wide freezing order, the circumstances in which the court will infer a risk of dissipation from underlying allegations of fraud where there is limited solid evidence that the defendant has assets.

Funds paid to an administrator of car dealership by car warranty company were not subject to a trust.

Successfully defending trustee in bankruptcy in a negligence action.

Whether the Judgments Regulation or the Insolvency Regulation applied to a claim for damages issued in the English court against a Dutch bankruptcy trustee and whether the English court was forum non conveniens.

Whether fees under retrospective CFA should be taken into account in assessing a payment on account of costs.

Whether it was appropriate to remove liquidators from their appointment as liquidators to one of two associated companies due to an alleged conflict of duties owed to each of those companies.

Acting for a trustee in bankruptcy in a second appeal concerning the meaning and effect of the “use it or lose it” provisions in s.283A of the Insolvency Act 1986.

Acting for a liquidator in a wrongful trading and misfeasance trial involving a failed property development.

Chancery Division – application by landlord to set aside guarantee-stripping Miss Sixty CVA on grounds of unfair prejudice; duties of administrators in propounding CVA

Whether reversioner could sue in nuisance in respect of an alleged temporary nuisance by the presence of scaffolding; whether administrators personally liable in tort for nuisance.

Whether guarantor of tenant who had paid sums in respect of rent was entitled to be reimbursed such sums as an administration expense; extent of agreement by administrators to pay rent as an administration expense; guarantee-stripping – construction of terms of CVA and whether guarantor entitled to prove in CVA in respect of liability for rent of closed store; alleged surrender of lease by operation of law.

Whether English office-holders should await the outcome of foreign proceedings before adjudicating upon a proof of debt.

Acting for a bankrupt and his wife seeking to have their matrimonial home re-vested in them in a test case about the operation of the “use it or lose it” rule.

IVA Providers' claim to determine the meaning and effect of the IVA Protocol, raising issues of justiciability and the question whether institutional creditors were bound to vote in favour of protocol-compliant IVAs in certain circumstances.

Where a joint administrator had been so closely involved with the negotiations of a pre-pack contract for the sale of a firm of solicitors' work in progress retainer, the court exercised its powers of removal under the Insolvency Act 1986 Sch.B1 para.88 in favour of appointing another administrator to con.duct an independent review into the terms and circumstances of that contract

An application for a non-party costs order against a director of a company sued by Equitas during an informal insolvency insurance run-off.

Application for disclosure by trustee opposed on grounds of breach of Art 8 of ECHR.

Whether the ability of a trustee in bankruptcy to claim occupation rent based on equitable principles survived the passing of the Trusts of Land and Appointment of Trustees Act 1996 and the decision of the HL in Stack v Dowden.

Construction of a time-bar clause in a CVA.

Bankruptcy annulment on condition that bankrupt pay trustee’s costs. Extent to which trustee entitled to realise bankruptcy estate to pay his costs where no other creditors.

An arbitration arising out of the football creditors rule as it affected Leeds United FC and the ability of the Football League to impose a 15 playing points deduction by reference to the football creditors rule.

Fraudulent trading claim alleging accountants party to the carrying on of client's business for fraudulent purpose.

Appeal against refusal to adjourn private examination and application to set aside order on the ground that the application should not have been made ex parte. Prima facie case of fraud by fresh air invoicing took case out of ordinary and administrators needed information urgently concerning genuineness of book debts in early stages of administration.

Whether a trustee in bankruptcy was prevented from applying for possession and sale of the matrimonial home prior to the happening of any of the events stipulated in a pre-bankruptcy order of the divorce court postponing sale.

Concerning the nature and effect of the provisions restricting the use of company names in sections 216 and 217 of the Insolvency Act 1986 and the ability of a petitioner to found a petition under section 459 of the Companies Act 1985 based on breaches of section 216.

Assignment of causes of action for misfeasance - bidding competition - interests of expense creditors - relevance of public interest in not to stifling misfeasance claims. Appeal by shareholder and disappointed bidder against assignment of cause of action to director dismissed.

Application by local authority to sell PFI assets pending trial of a claim by the funder of a failed PFI project of a right to remove and sell them notwithstanding a PFI vesting clause on contractor default.

Nature and extent of court's jurisdiction to strike down transactions defrauding creditors and limitation period within which to do so.

Circumstances in which directors may be jointly and severally liable for unlawful loans made by each other to their company.

Enforcement of charging order by creditor in respect of bankrupt’s home, which had purportedly been assigned by trustee in bankruptcy to fictitious person concocted by bankrupt. Deed of assignment held to be forged and a nullity.

Whether fixed or floating charge over credit balances; Whether cause shown for removal of liquidators.

Whether declaration of trust of life policy a transaction at an undervalue.

Whether unfair prejudice or material irregularities affecting CVAs, conflicts of interest affecting office-holders in group insolvency.

Whether time costs and remuneration of insolvency practitioner as officeholder were recoverable as litigation costs.

Judicial review of disciplinary proceedings against licensed insolvency practitioner, whether fair process.

Effect of insolvency clause, whether to appoint provisional liquidator, length of proposed provisional liquidation.

Nature and extent of court's jurisdiction to strike down transactions defrauding creditors and limitation period within which to do so.

Operation of the "football creditors" rule, whether Wimbledon's CVA was unlawful.

Repatriation of intellectual property rights transferred by insolvent English company to nominee companies.

Removal of joint liquidators - appropriate test - construction of debenture - fixed or floating charge.

Whether directors' disqualification proceedings justifiable.

Nature and extent of insolvency set off.

The Court declined to stay a s459 petition for arbitration on the grounds that the court was the proper tribunal to decide the petition and related issues.

Whether the Inland Revenue should disclose documents relating to its conduct in other football insolvencies.

Extension of time for creditor’s appeal against decision of chairman of meeting of creditors and for application to revoke IVA granted as only 1 day late, honest mistake about time limit, arguable substantive case and no prejudice to debtor.

Whether a bankrupt could pursue a claim for professional negligence.

Whether the liquidators were entitled to security for costs on an application to remove them from their posts under s108.

Whether expert evidence of best practice admissible on application to remove liquidator.

Misfeasance, fraudulent trading, freezing order, calculation of limit.

Administration petition - whether purpose of more advantageous realisation of the company's assets likely to be achieved.

Approach to construction of CVAs and meaning of "contingent creditor".

Whether bankruptcy petition was an abuse of process due to improper collateral purpose of petitioner.

Transaction at an undervalue - whether monetary compensation appropriate - grant of injunction and appointment of receiver pending speedy trial.

Individual Voluntary Arrangement - fixed duration - effect of failure to extend within the fixed period.

Administration - whether solicitors should be given leave to retain title deeds of a client company in administration.

Effect of non-compliance with Insolvency Rules and Practice Direction.

Whether proceeds of insurance policy payable upon permanent disablement of bankrupt vest in trustee in bankruptcy.

Whether milk quota held on trust for liquidators.

Bankruptcy - Grepe v Loam order.

Circumstances in which CA will set aside permission to appeal and ability of bankruptcy to litigate.

Whether administrative receivers personally liable for alleged misrepresentations.

Validity of specific assignment of individual's book debts following void general assignment.

Liquidator's application for summary judgment on misfeasance claim.

Whether Environment Agency needed leave / consent to commence criminal proceedings.

Whether liquidator's solicitor owed duty of care to funding creditor.

Class nature of s423 proceedings.

Effect on debenture holder of contractual prohibition against assignment.

Bankruptcy - approach of court to bankrupt's appeal out of time.

Whether security for costs should be ordered against trustee after assignment of cause of action back to bankrupt.

IVAs - whether unfair prejudice against creditor with insured claim.

Bankruptcy annulment; meaning of “unable to pay his debts”; acid test was cash flow insolvency.

Directors' disqualification - principles applicable to Carecraft procedure.

Whether bank had released assets from its security.

Bankruptcy - whether estoppel against trustee in bankruptcy.

Voluntary liquidation; application of VAT charged on asset sale.
CVL - whether liquidator accountable.

IVAs - failure and petition by supervisor.

Whether conditions should be imposed on granting leave to commence proceedings against a bankrupt

CVAs - whether material irregularity.

Extent of bank's duty to account as constructive trustee.

Effect of cross-claim on bankruptcy petition debt.

Bankruptcy and restitution - accountability for profits.

Retrospective leave to commence proceedings against bankrupt.

Receivers, overreaching and constructive trusts.

Effect of interim order in respect of IVA - whether landlord required leave for peaceable re-entry.

Whether bankrupt entitled to fishing licence.

Striking out proceedings against receivers.

Transactions at an undervalue and legal professional privilege.

Bankrupt trustees exercising power of appointment under a trust.

Bankruptcy petition - whether offer to secure or compound was unreasonably refused by creditor under s.271(3) IA 1986.

Whether receivers were administrative receivers.

Administration Order-whether leave to possess plant required.

Set off and misfeasance.

Statutory demand in foreign currency.

Wrongful trading, misfeasance and preference claim.