Legal News

The Insolvency Service has revealed that Glasgow-based management consultant, Steven David Hutton, aged 47, received an eight-year disqualification order after failing to maintain proper accounting records for the company, covering income of more than £63,800 and assets of more than £137,000 in total. Hutton was the sole director of Marchmount Consulting Ltd, incorporated in December 2008, which operated as a management consultancy providing ongoing professional services......

Is your appointor entitled to appoint? The importance of verifying the power to appoint UK administrators ( Borg- Olivier v Knowles & others) Borg- Olivier v Knowles and others [2022] EWHC 2579 ( Ch) The authority to install an administrator is a key tool for debenture holders when moving to realise their security. To use that mechanism, the debenture must constitute a QFC and it must be capable of enforcement. Borg- Olivier underlines how crucial enforceability is, and how a lack of it can undermine the validity of any administrator appointment. Here, the appointees ultimately discovered they were not validly appointed after the Court concluded the QFC was not enforceable on the date of appointment. Facts Administrators were put in place using the out-of-court route by a QFCH. Before the appointment, the QFCH served a formal demand on the company for...

Chopra and others v Katrin Properties Ltd and another company [2022] EWHC 2728 ( Ch), [2022] All ER ( D) 17 ( Nov) What are the practical implications of this case? Although determined on its particular facts, the decision underscores that: where liability under a personal guarantee (or any lending arrangement) is conditional upon a demand, that demand must be properly served if no such demand is served, any statutory demand should be set aside allegations of fraud—even when seeking to set aside a statutory demand—are not automatically accepted and may require supporting evidence What was the background? The applications concerned two lenders— Katrin Properties Ltd ( Katrin) and KSEYE Capital Holdings Ltd ( KSEYE)—and four alleged debtors. The supposed liabilities stemmed from loans to various companies which, on the face of the documentation, appeared to be personally guaranteed by the...

ABT Auto Investments Ltd v Aapico Investment Pte Ltd [2022] EWHC 2839 ( Comm), 14 November 2022 What are the practical implications of this case? The court confirmed that, when a collateral‑taker invokes appropriation, there is no distinct, freestanding duty to act in good faith. The only statutory requirement is that any valuation be carried out in line with the agreed terms and, in any event, in a commercially reasonable manner—no more and no less. That test is objective, operating as an impersonal benchmark rather than a subjective discretion. A collateral‑taker cannot proceed arbitrarily or unreasonably when selecting and applying a valuation methodology; the choice and application must be rational and defensible. What is commercially reasonable will always turn on the facts. Even if a valuation were not undertaken in a commercially reasonable way, the court stated it would not be void from the outset. The...

Heytex Bramsche GMBH v Unity Trade Capital Ltd [2022] EWHC 2488 ( Ch), [2022] All ER ( D) 38 ( Oct) What are the practical implications of this case? Although fact-specific, this ruling will interest insolvency practitioners as a reminder of the bar for avoiding a winding-up order. In this instance, notwithstanding that low bar, the court concluded there was no genuine or substantial dispute. It also carries weight for finance lawyers more broadly, emphasising the need for precisely drafted paperwork—here, letters of credit in the sphere of international trade finance. Core terms—identifying the parties, defining their respective functions and liabilities, stating the proper signatories, and confirming the incorporation of standard (or bespoke) conditions—must be clear and consistent. For letters of credit in particular, any marked shift from their commercial purpose (ie, assuring the buyer of payment against documents and the seller against buyer...

Bacci and others v Green [2022] EWCA Civ 1393, [2022] All ER ( D) 75 ( Oct) What are the practical implications of this case? This ruling highlights the adaptability of injunctive relief and the growing ingenuity of enforcement options open to creditors. The court may issue injunctions requiring debtors to authorise creditors to exercise personal or proprietary rights (without appointing receivers) so that assets are available for enforcement. Creditors who cannot meet debts through more conventional enforcement paths will welcome this. It approves a streamlined delegation of powers instead of the comparatively expensive and drawn-out process of appointing receivers by equitable execution. What was the background? The appellant, Mr Green, had borrowed funds from a lender. After failing to repay, the lender issued proceedings and obtained summary judgment for around £3m. A bankruptcy order was then made against him. As his liability arose from deceit and...

The Insolvency Service officially confirmed that 51-year-old Vincent Christopher Larkin has been banned from acting for six years after failing to settle almost £210,000 in outstanding tax. Absent from the hearing, Larkin was disqualified and was also ordered to pay costs of £7,355.80. Larkin was the director then......

The Insolvency Service has revealed that Christopher Bateman, 49, of Knutsford, and Nicola Fairweather, 48, of Macclesfield, directors of two linked companies, GCC Management Ltd and Amek Solutions Ltd, have been disqualified for a combined 25 years after misusing millions of pounds of investors’ funds in a care home investment scheme. The Insolvency Service’s investigations began when the two companies entered insolvency procedures. GCC Management was an unregulated company that offered people the chance to invest in the purchase of care homes. While Amek Solutions advised on and/or arranged as stated by investigators......

Re Wotherspoon (in bankruptcy); Hinton (as trustee in bankruptcy of John Wotherspoon) v Gillian Wotherspoon [2022] EWHC 2083 ( Ch), [2022] All ER ( D) 67 ( Aug) What are the practical implications of this case? It is axiomatic that, in nearly every claim, the claimant or applicant bears the burden of proof. That principle equally applies to office-holders pursuing antecedent transaction claims. Pre-bankruptcy dealings between a would-be bankrupt and a spouse or close associate may tempt an office-holder to infer an improper motive and press a claim. This decision squarely reminds insolvency practitioners and lawyers that, even if the recipient’s or bankrupt’s account seems doubtful, there must still be contemporaneous material from which the case can be proved. That is especially significant under IA 1986, s 423, where an improper purpose must be demonstrated and not merely presumed in light of the...

Oceanfill Ltd v Nuffield Health and Cannons Group Ltd [2022] EWHC 2178 ( Ch) What are the practical implications of this case? This decision may offer reassurance to commercial landlords anxious about tenants attempting to cram down landlord claims under the new CA 2006, Pt 26A, especially after the High Court sanctioned the Virgin Active plan. Under Pt 26A—specifically CA 2006, s 901G—the court can approve a plan even where not all creditor classes support it, via a cross-class cram-down, provided at least one class has agreed and that no member would fare worse under the relevant alternative (ie the most likely outcome if the plan were not approved). For landlords holding AGAs—and it is worth reviewing historic title documents, as the AGA here dated back around twenty years—it is reassuring that such guarantees are not automatically stripped of value in exactly the...

Changtel Solutions UK Ltd ( In Liquidation) and others v G4S Secure Solutions ( UK) Ltd [2022] EWHC 694 ( Ch), [2022] All ER ( D) 56 ( Apr) What are the practical implications of this case? This ruling underscores how hard it is to justify payments made after presentation of a winding-up petition. Even though G4S Secure Solutions ( UK) Ltd ( G4S) did not know of the petition, it could not lawfully keep the monies received. That outcome, though harsh for individual creditors, reflects the policy embodied in IA 1986, s 127. Except in rare cases, a validation order should be confined to dispositions that advantage the unsecured creditor body as a whole ( Express Electrical Distributors Ltd v Beavis [2016] 1 WLR 4783), and that criterion was not met here. Because a change of position defence arises only where a...

JSC VTB Bank v (1) Alexander Katunin (2) Sergey Taruta (3) Arrowcrest BVIHC ( COM) 2014/0062 Background VTB, a Russian bank, moved to enforce a US$30m judgment debt against a Ukrainian businessman and politician, secured before the invasion of Ukraine. Following the UK’s sanctions against VTB, its BVI legal advisers applied to come off the record on the basis that continuing to represent VTB would harm their reputation and was likely......

Re Michael Bernard Mc Namara; Wilson and another (joint trustees in bankruptcy of Michael Bernard Mc Namara) v Mc Namara and others [2022] EWHC 243 ( Ch) What are the practical implications of this case? The applicants were prevented from advancing a fresh point after a Court of Justice ruling. Their argument—that the Court of Justice’s conclusion that WRPA 1999, s 11 was contrary to Article 49 TFEU, save where justified in the public interest, meant the UK High Court had to assess justification—was rejected. The Court of Justice is not an appellate body issuing instructions to a lower court; apart from delivering definitive statements of law, it lacks authority to direct the national court’s procedure or determinations. It followed that any justification case had to be raised within the existing proceedings, and the applicants had not done so before the...

Lehman Brothers Holdings Scottish LP 3 v Lehman Brothers Holdings plc (in administration) and others; Joint liquidators of LB GP No 1 Ltd (in liquidation) and another v Joint administrators of Lehman Brothers Holdings plc (in administration) and another [2021] EWCA Civ 1523 What are the practical implications of this case? The effect of the court’s adjustment to the rule against double proof is that a surety who makes a part payment under a settlement and, in doing so: waives its right of indemnity against the insolvent principal debtor; and obtains an assignment from the creditor of the principal debtor’s liability, will be confined to proving for the remaining unpaid amount. In its capacity as assignee, it cannot rely on the general double proof rule that allows an unpaid creditor to prove in full without setting off any part payment made by a surety. Parties should...

Galer v Mond (administrator of SFPL Ltd) and another [2021] EWHC 1952 ( Ch), [2021] All ER ( D) 110 ( Jan) What are the practical implications of this case? Several elements of this ruling turn on the precise wording of the facility agreement and the deed of assignment, so its broader relevance is limited. Even so, the court set out helpful general guidance: in the absence of any evidence of misconduct, it is wholly improper to imply that a particular administrator will fail to fulfil their duties properly. The judge made plain that one cannot obtain a declaration that an administrator’s appointment is invalid by relying on what he described as 'a smokescreen of general allegations'... What was the background? SFPL Ltd ( SFPL) was incorporated in August 2016 as a vehicle for the acquisition and development of a property in London. There were a number of...

Paul Lowenstein QC- Twenty Essex Josephine Davies- Twenty Essex On 24 June 2021, Mr Justice Adam Johnson dismissed an appeal from the Chief Master in the Chancery Division, delivering a considered judgment that declined to apply section 32 of the Limitation Act 1980 ( LA 1980) to extend time sufficiently for the claim form to have been issued before expiry. He held that, at the point of an earlier fraud action started years before, the claimant already knew enough facts to plead a case against the defendant. The court decided that uncovering a small number of extra documents later did not alter the reality that the claim could have been brought sooner. The appeal ruling is a striking illustration of the court cutting through dense factual material to pinpoint the few salient matters needed to determine when, with reasonable diligence, the claimant could have...

A Introduction This paper explores whether running parallel schemes of arrangement is either required or desirable when implementing cross-border restructurings for companies incorporated in an offshore jurisdiction (namely the Cayman Islands, Bermuda or the British Virgin Islands (‘ BVI’)) whose principal operations or assets, in substance, lie predominantly within an onshore jurisdiction (specifically Hong Kong or the People’s Republic of China). The issue emerges from certain obiter observations made by Deputy High Court Judge William Wong SC in Da Yu Financial Holdings Ltd [2019] HKCFI 2531 (not reported by Lexis Nexis®), a case that concerned parallel and inter-conditional schemes of arrangement advanced in both the Cayman Islands and in Hong Kong in respect of a Cayman-incorporated company whose principal place of business, and only significant asset, were situated in Hong Kong. While approving the Hong Kong scheme, Deputy Judge...

Brown- Forman Beverages Europe Ltd v Bacardi UK Ltd [2021] EWHC 1259 ( Comm) (19 May 2021) What are the practical implications of this case? The rule from Holme v Brunskill (1877) 3 QBD 495 provides that any material change to the contractual terms between the creditor and the principal debtor releases a guarantor. If a variation has been made, the creditor must demonstrate that the change can only operate to the surety’s advantage, or that by its very character it can never in any situation increase the surety’s exposure. Parties may exclude this rule by agreement, and prudent creditors routinely do so. It has been labelled a snare for the careless creditor. This judgment confirms two significant practical propositions concerning the rule and points to a specific hazard. First, the court reiterates that the rule is confined to guarantees and does not extend to...

Sciortino v Beaumont [2021] EWCA Civ 786 What are the practical implications of this case? This ruling is poised to affect practitioners who advise on professional negligence claims, particularly proceedings brought against solicitors and barristers. Although the Court of Appeal reaffirmed that there is no ‘continuing duty’ to revisit or reassess earlier advice, it decided that a fresh breach of duty may arise on every occasion advice is given, even where it concerns the same point. That approach may assist claimants to pursue negligence actions that might otherwise have fallen foul of limitation. The Court of Appeal also confirmed that, subject to the express terms of the retainer, there is no ongoing obligation to scrutinise past advice for latent mistakes. Where negligent advice gives rise to loss occurring outside the limitation period, the claim will, in general, be time-barred. That outcome cannot be...

Secretary of State for Business, Energy and Industrial Strategy v Rajgor [2021] EWHC 1239 ( Ch), [2021] All ER ( D) 51 ( May) What are the practical implications of this case? The Companies Act 2006 ( CA 2006), section 386, sets out in detailed terms a company’s obligation to maintain sufficient accounting records, and nature of what must be retained. This judgment serves as a stark caution to directors (and their advisers) that avoiding a misconduct finding under section 6 of the Company Directors Disqualification Act 1986 will be challenging where any of the following are relied upon: asserting that records existed but were not handed over to the liquidator (or another insolvency office-holder) or to the Insolvency Service attempting to shift responsibility onto individuals engaged by the company (be they an accountant, bookkeeper, or similar member of...