Provisional liquidator meaning

In this issue: Directors and insolvency Corporate insolvency processes Insolvency litigation Daily and weekly news alerts Key dates for R&I professionals Directors and insolvency BHS directors liable for trading misfeasance in excess of £110m (Wright v Chappell; Re BHS Group Ltd). Concluding the proceedings against the former BHS leadership, the Court determined the directors were jointly and severally accountable for the uplift in the company’s net deficiency, caused by breaches of duty that kept the business trading. See News Analysis: BHS directors liable for trading misfeasance in the sum of more than £110m (Wright and others v Chappell and others; Re BHS Group Ltd), by Phillip Patterson, barrister, Gatehouse Chambers. Recovery of improper payments and unlawful dividends from directors of insolvent company (Manolete Partners v Mohammed). The court accepted, in relation to a number of payments made by the company, that creditors’ interests were triggered at an early point; the entity’s apparent solvency depended on including...

In this issue: Key R&I law developments Corporate insolvency procedures Creditors’ involvement Property insolvency Directors and insolvency Insolvency litigation Restructuring Daily and weekly news alerts New content Key R&I law developments Navigating UK sanctions in bankruptcy proceedings—the Hellard decision (Hellard V OJSC Rossiysky Kredit Bank) The High Court issued guidance to the trustees in bankruptcy of a Russian individual on issues arising under the Russia (Sanctions) (EU Exit) Regulations 2019. Given the potential for serious criminal and civil penalties, any action taken in an insolvency that touches on actual or suspected sanctioned parties is a high‑risk area for officeholders. The court confirmed that trustees would not breach UK sanctions by permitting sanctioned entities to engage in the bankruptcy process, prior to any distribution, as creditors—this expressly covers voting in creditors’ decision procedures and taking part in, and voting on, the creditors’ committee. See News Analysis: Navigating UK sanctions in bankruptcy proceedings—the...

Insolvency, revenue law, and civil procedure (The Commissioners for HMRC v Payroll & Pension Services (PPS Umbrella Company) Ltd) Revenue and Customs Commissioners v Payroll & Pension Services (PPS Umbrella Company) Ltd [2024] EWCA Civ 995 What are the practical implications of this case? Before this ruling, first-instance decisions had split along two paths: one held that HMRC was discharging a public interest or law-enforcement role and so need not provide any cross-undertaking in damages; the other treated HMRC, for these purposes, as no different from a creditor enforcing a debt, requiring a cross-undertaking as the price of the order. The Court of Appeal confirmed the latter strand is right. Because appointing provisional liquidators can have a catastrophic impact on a company’s business, if such relief is wrongly obtained the company now has at least some assurance that it may pursue the undertaking. Accordingly, HMRC must proffer a cross-undertaking when seeking the order. This provides a measure of protection where the appointment proves unwarranted. What was the...

Introduction and background The Bankruptcy (Scotland) Act 1985 (B(S)A 1985) took effect in 1986 and laid out, in detail, the processes for managing sequestration (Scottish bankruptcy). When the Insolvency (Scotland) Rules 1986, SI 1986/1915, were issued shortly afterwards for corporate insolvency in Scotland, they drew upon the newly enacted B(S)A 1985 provisions and tailored them for liquidation, particularly for adjudication of claims, accounting periods, and approval of the liquidator’s remuneration. Accordingly, the 1986 liquidation rules directed readers to the relevant parts of B(S)A 1985, with instructions to read ‘liquidation’ for ‘sequestration’ and ‘liquidator’ for ‘trustee’. With the advent of the ‘new’ administration regime in 2003 under the Enterprise Act 2002, the administration rules covering adjudication of claims, accounting periods and approval of the administrator’s remuneration simply cross-referenced the liquidation rules, which themselves referred back to sequestration and B(S)A 1985. Thus, the approach to adjudication of claims and the approval of remuneration across sequestration, liquidation and administration was broadly consistent and founded on B(S)A 1985. The Insolvency (Scotland) Amendment Rules...

Applicable legislation Insolvency legislation typically includes bespoke measures for insurers, reflecting the sector’s regulated nature and the significance of insurance to the wider economy. The Financial Services and Markets Act 2023 (FSMA 2023) revises the UK framework for insurer insolvency, clarifying certain aspects and broadening safeguards for insurers and their policyholders undergoing insolvency or write-down processes—the government consulted on these reforms in 2021 and issued its response in April 2022 (refer to News Analysis: Financial Services Markets Bill sets out post-Brexit framework for UK financial services, HM Treasury publishes response to consultation on insolvency arrangements for insurers—LNB News 07/04/2022 78 and Practice Note: The Financial Services and Markets Act 2023—essentials). The Prudential Regulation Authority (PRA) released consultation paper CP3/23, Dealing with insurers in financial difficulties, outlining proposed rules and policy in light of the FSMA 2023 changes (see: LNB News 08/02/2023 70). Those rules came into force in September 2023. HM Treasury has also published the outcome of its consultation on a new Insurer Resolution Regime (IRR) and intends...

This glossary sets out numerous expressions frequently encountered in the restructuring arena. Words appearing in the definitions in bold are explained in other entries in this glossary. For further banking terminology, see the principal Banking & Finance Glossary. Restructuring glossary—A Acceleration: Acceleration means the agent, acting on directions from the majority lenders after an event of default, takes formal action, for example calling for early repayment of the facility. Ad-hoc committee: A temporary creditors’ group (often contrasted with a formal committee) that lacks any entitlement to official recognition. Administration: A process under the IA 1986 in which a financially distressed company is operated by an administrator as a going concern before longer-term outcomes, such as break-up and sale, are pursued. Administrator: An Insolvency Practitioner named by the court, a Qualifying floating charge holder, the directors or the company, to take control and fulfil one of the purposes in IA 1986, Sch B1. Administrative receivership: Arises when a company breaches the terms of...

1 Introduction The current time is [ insert the exact time ], and I hereby formally commence and open the meeting of Scheme Creditors of [ insert name of the company ] [ with [ insert type of claim ] claims, and the meeting of Scheme Creditors of [ insert name of the company ] with [ insert type of claim ] Claims ]. My name is [ insert name ], from [ insert firm or company name ][ insert details of who the chairperson is eg adviser/administrator/provisional liquidator, etc ]. The meeting [ s ] that [ is OR are ] being held today [ has OR have ] been called by the Company under an Order of the High Court of Justice of England & Wales issued on [ insert date ]. The aim of the Meeting [ s ] is to review and, if deemed appropriate, approve the scheme of arrangement under Part 26 of the Companies Act 2006 that the Company intends to enter into...

Introduction The current time is [ insert the exact time ] and I commence the creditors' meeting of [ insert name of the company or LLP (Company) ], convened as a general meeting of creditors pursuant to the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, as amended. My name is [ insert name ], of [ insert firm or company name ], acting as [ insert details of role of the chair, eg adviser/[joint] administrator/[provisional] liquidator etc ]. The meeting being held today is quorate, as the required minimum number of creditors is in attendance...