Legal Practice Notes

This note sets out how a Limited Liability Partnership ( LLP) may enter creditors’ voluntary liquidation ( CVL), describes the scope of the liquidator’s authority, and explains the duties of the members. It does not extend to Limited Partnerships; for guidance on those, see Practice Note: Limited partnerships and insolvency—key principles. Applicable legislation The Limited Liability Partnerships Act 2000 ( LLPA 2000) introduced LLPs and should be read together with the Limited Liability Partnerships Regulations 2001 ( LLPR 2001), SI 2001/1090. Under the LLPR 2001, the Insolvency Act 1986 ( IA 1986) and the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, are applied to LLPs. The IA 1986 applies solely to LLPs registered in Great Britain......

Although every litigation funding agreement ( LFA) and its related papers differ by the funder and the nuances of the claim being financed, certain core matters must be dealt with through distinct stages of negotiation. This Practice Note forms part of a concise series from Tanya Lansky and Tets Ishikawa, Managing Directors at Lion Fish Group Ltd, designed to equip participants negotiating or evaluating LFAs and their ancillary documents with a clearer grasp of key dynamics. It highlights the considerations at play for practitioners across negotiation phases. Emphasis rests on identifying issues common to most LFAs despite case-specific features and differing funder approaches. Adverse costs risks for funders Solicitors invariably warn clients about potential exposure to adverse costs should litigation ultimately fail. The emergence of the after-the-event insurance ( ATE) market offered claimants a means to hedge these hazards where an insurer...

What is it? Third-party litigation funding ( Funding) involves a separate entity (the Funder) advancing money to cover part or all of the litigation costs, in exchange for an agreed return if the matter is won or resolved by settlement. Although the idea of Funding is straightforward, it carries many subtleties and particulars, with choices that must be weighed and contrasted before identifying what suits a claim. Funding is specialised—the expense and eligibility thresholds mean a number of disputes do not qualify for Funding. The market of Funders is growing, with differing requirements and preferred investment niches. Funding itself is not regulated; however, many Funders belong to the Association of Litigation Funders ( ALF) (the ALF website can be viewed here) and adhere to the ALF’s voluntary code of conduct. Numerous professionals who arrange Funding, including solicitors and brokers, are regulated. Any...

While every litigation funding agreement ( LFA) and its related documents will differ according to the funder and the specificities and nuances of the funded matter, there are core issues that must be addressed during the various stages of negotiation and documentation. This Practice Note forms part of a short series by Tanya Lansky and Tets Ishikawa, Managing Directors of Lion Fish Group Ltd, designed to equip those negotiating or evaluating LFAs and their accompanying papers with a clearer understanding of the factors at play. Representations and warranties A lengthy representations and warranties ( R& W) provision can appear onerous and, at first glance, disproportionate. However, in any commercial contract its breadth typically correlates with the complexity of the underlying investment; and because litigation is, by nature, complex, comprehensive R& W are ultimately unavoidable. Conversely, the more burdensome the R& W regime, the more limited the level of...

Although every litigation funding agreement ( LFA) and the papers that sit alongside it will differ by funder and by the nuances of the case supported, there are core points that must be dealt with throughout the stages of negotiation, at each phase and juncture. This Practice Note forms part of a concise series by Tanya Lansky and Tets Ishikawa, Managing Directors of Lion Fish Group Ltd, intended to equip those closely negotiating or assessing LFAs and their companion documents with a clearer grasp of the dynamics at play in practice. Termination clauses Termination clauses are, by design, severe; that severity is inherent, as they represent an ultimate fallback that compels the funder to crystallise losses which instantly depress performance—whether measured at a fund level for those who manage funds, or on a P& L basis for principal investors. Consequently, a funder will not look to invoke a...

This Practice Note on cryptoassets (a type of digital asset) for dispute resolution lawyers outlines what cryptoassets are and why litigators must understand how they function and where they feature in their cases—namely, the kinds of claims that may arise (currently involving chiefly cryptocurrencies), whether forming the crux of the dispute or appearing within the surrounding factual matrix. See: Cryptoassets for dispute resolution lawyers—overview for recognition of the broader range of digital assets (such as non-fungible tokens ( NFTs) and digital securities) to which comparable issues apply regarding the status of such assets under English law as to the creation, protection and enforcement of rights, particularly given their intangible quality, the novel technologies in which they are created/exist and the largely international (and thus seemingly fluid) character commonly associated with them. Note that this is a developing area of law; see Practice Note:...

This Practice Note explores liquidators’ use of disclaimer in relation to contracts (commonly a sale contract or transfer) that include overage clauses or provisions, within the statutory framework for disclaiming onerous property under section 178 of the Insolvency Act 1986 ( IA 1986). It summarises what overage means, the liquidator’s power to disclaim onerous property, and whether overage can amount to ‘onerous property’ that a liquidator may disclaim in practice. It further considers how the court has applied the effect of disclaiming contracts containing overage in the decision of Groveholt Ltd v Hughes. For fuller guidance on a liquidator’s general power to disclaim onerous property, see Practice Note: The process of disclaimer by a liquidator or trustee in bankruptcy under sections 178 or 315 of the Insolvency Act 1986. For the procedure to be followed when a liquidator disclaims onerous property, see:...

The Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024, prescribe the framework for liquidation committees in both creditors’ voluntary windings-up and court windings-up, and for creditors’ committees in administrations and administrative receiverships (collectively, committees). General A committee offers the office-holder a forum for consultation on strategy, including how funds might be deployed for particular investigations; nevertheless, in practice such committees are rarely set up. A committee must not intrude upon the office-holder’s statutory duties, nor oblige them to act in a manner they consider inappropriate. In addition to any powers granted by the Insolvency Act 1986 ( IA 1986), the committee’s purpose is to assist the office-holder in performing their functions and to deal with the office-holder in whatever way may be agreed from time to time. For example, a liquidation committee provides both assistance and oversight in relation to the...

The Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024 set out a refreshed framework for taking decisions across all insolvency processes. The granular rules on decision-making are contained in IR 2016, SI 2016/1024, Pt 15. This Practice Note addresses the practical steps for forming a liquidation committee and explains the general creditors’ decision-making in liquidation. In reality, a liquidation committee carries considerable weight where cases are sizeable and complex. The liquidation committee Liquidators must obtain decisions by deemed consent or through a qualifying decision procedure. Physical meetings are permissible only when the relevant minimum number of creditors so request under section 246ZE of the Insolvency Act 1986 ( IA 1986), though creditors may call for one before the notice of deemed consent or qualifying decision procedure is sent. In a creditors’ voluntary liquidation, creditors will be asked to determine if a...

Relevant legislation Limited partnerships are established pursuant to the Limited Partnerships Act 1907 ( LPA 1907). Of note for such structures, the Insolvency ( Miscellaneous Amendments) Regulations 2017, SI 2017/1119, revise the Insolvent Partnerships Order 1994 ( IPO 1994), SI 1994/2421, substituting citations to the Insolvency Rules 1986, SI 1986/1925, with references to the Insolvency ( England and Wales) Rules 2016, SI 2016/1024. Those Regulations also modify the Company Directors Disqualification Act 1986 ( CDDA 1986), bringing in several changes to the director disqualification framework, namely: broadening the factors of unfitness to be assessed on a disqualification, lengthening the time limit for issuing a disqualification application to three years, and permitting applications for a compensation order against a disqualified director. For more information, consult the government’s Explanatory Memorandum and the News Analysis: Aligning provisions of general insolvency law—the Insolvency (...

A light touch administration A light touch administration describes an administration in which directors retain limited authority to run the company while the administrators take a restrained, supervisory approach. Directors continue to assume certain managerial responsibilities, carrying out the administrators’ directions and, within defined limits, making some management decisions themselves under restriction. Under paragraph 64(1) of Schedule B1 to the Insolvency Act 1986 ( IA 1986), directors must not exercise management powers without the administrator’s consent. In a light touch arrangement, the administrator gives general or specific consent for the existing directors to keep managing the company under their oversight, and creditor approval is not required. Administrators can appoint and remove directors ( IA 1986, Sch B1, para 61). This approach is generally suited to circumstances where the administrators consider the company can be rescued as a going concern, reflecting the objective in IA 1986, Sch B1, para...

ARCHIVED : This Practice Note has been archived and is not maintained . This Practice Note offers: context on moving away from the London Interbank Offered Rate ( LIBOR) and other Interbank Offered Rates ( IBORs) towards risk-free rates ( RFRs) (so called as they indicate minimal credit risk—see glossary definition below) clarification of key terminology relating to the shift to RFRs a table identifying the RFR chosen for each LIBOR currency and the priorities of the relevant Working Group an outline of LIBOR contractual fallbacks details of issues particular to the loan market arising from the transition to RFRs details of issues particular to the derivatives market arising from the transition to RFRs details of issues particular to the debt capital markets arising from the transition to RFRs an update on the current position of EURO...

What does this Practice Note cover? This Practice Note sets out an overview of liability management techniques for bonds—covering bond buybacks, tender offers, exchange offers and consent solicitation—placing particular emphasis on the process, the documentation to be prepared, and the principal legal and regulatory considerations that arise in delivering such transactions. The Note is directed mainly at investment‑grade bonds issued in the UK and European markets. For further information on liability management exercises, including liability management transactions involving loans/credit agreements, see Practice Note: FAQs on Liability Management Exercises. What is liability management in relation to bonds? Liability management describes a range of techniques used by issuers to actively manage or restructure their outstanding bond liabilities. Typical liability management transactions comprise: bond buyback tender offer exchange offer consent solicitation A liability management transaction can also be structured as a combination of these techniques......

What is the Local Government Pension Scheme? The principal pension arrangement for local authorities is the Local Government Pension Scheme ( LGPS). As a statutory, public service scheme, it covers local government and related staff across England and Wales, with distinct schemes operating in Scotland and Northern Ireland. For a general overview, see: Local government pensions—overview. Bodies joining the LGPS—whether admission, scheduled or designated—take on significant duties and potential risks. Guidance on which employers can participate is set out in Practice Note: The Local Government Pension Scheme—admission agreements. A core responsibility is meeting the cost of benefits, a commitment that most participating employers expect and plan for. Less widely appreciated is the exposure that arises when certain LGPS employers fail because of insolvency or undergo employer restructuring. This issue has drawn particular focus in the education sector following funding reductions. This Practice Note...

Restructuring & Insolvency resources These key Restructuring & Insolvency resources are available in Lexis+® UK and signposted throughout the Restructuring & Insolvency content, delivering practical commentary, legislation, rules and guidance for restructuring and insolvency lawyers in private practice or in-house. Please note: the titles below are accessible only with the relevant Lexis+® UK subscription(s). Doyle, Keay and Curl: Annotated Insolvency Legislation Offers clear, practical direction on primary and secondary insolvency legislation; the latest edition includes the Corporate Insolvency and Governance Act 2020. Alongside the full text of key statutory provisions, each is accompanied by detailed analysis and commentary, giving practitioners and academics a comprehensive, portable reference. Authored by Louis Doyle KC, Professor Andrew Keay, and Joseph Curl KC. Who should use this resource? Restructuring and insolvency professionals needing...

Costs insurance This Practice Note examines costs insurance, also known as legal expense insurance ( LEI), which protects an insured individual against the risk of an adverse costs order in litigation. The principal forms are: before the event insurance ( BTE insurance) after the event insurance ( ATE insurance) This Practice Note should be read alongside Practice Note: Recovery of costs insurance premiums. Insurance is a complex field and is subject to regulatory requirements. It is crucial to understand those requirements, as non-compliance could lead a court to conclude that the policy is unenforceable, which in turn may restrict costs recovery. See further: Insurance contracts—overview and Regulated activities—overview. LEI policies are regulated by the Insurance Companies ( Legal Expenses Insurance) Regulations 1990, SI 1990/1159. LEI insurance involves paying a premium for the cover, and that cover will be subject to an excess that is not...

This Practice Note examines the effect of a court-appointed receiver on employees, contracts and landlords. Employees Typically, a court-appointed receiver is named as receiver and manager, so control of the company’s business vests in that receiver and manager. This alters the identity of the employer. Accordingly, the court’s appointment of a receiver and manager to the company results in the automatic termination of all employee contracts. Those employment contracts end with immediate effect......

Financial terms defined • Bond : This is a form of debt security, meaning a document that establishes a borrowing obligation under debt. For the entity issuing it, a bond serves as an alternative to borrowing money by means of a loan facility. In pension schemes, bonds have typically represented the second-largest slice of assets by asset class, sitting behind shares over time. Types include corporate bonds, which are issued by companies, and gilts, which are issued by the government respectively. Please note the following: In essence, bonds carry both a capital value and an income value component. The capital value reflects the bond’s price at market value or on redemption (that is to say, repayment). The income element is the coupon, that is, the interest rate. Put another way, bond prices move inversely to interest rates: when rates rise, values fall; when rates drop,...

This Practice Note sets out the limits on a landlord’s enforcement where a tenant faces insolvency in the most common situations. It addresses issuing court proceedings for rent or damages, taking action against guarantors or former tenants, seeking rent from subtenants, drawing down on a rent deposit deed, applying the CRAR procedure, forfeiture by peaceable re-entry, forfeiture through court proceedings, and serving notice on an insolvency practitioner requiring an election on disclaimer of the lease. For a general introduction to property insolvency see Practice Note: Quick guide to property insolvency. Restrictions on landlord remedies Bankruptcy Court proceedings for rent or damages: Not without the court’s leave ( IA 1986, s 285(3)). Pursue guarantors/previous tenants: Yes, under IA 1986, s 281(7). Claim rent from subtenants: Yes, under IA 1986, s 281(7). Use rent deposit deed: Depends on the deposit...

Contract Where an agreement is entered into by two or more parties, it may include a promise or obligation undertaken by two or more of them. Any such promise may be: joint several joint and several Whether an undertaking in contract is joint, several, or joint and several is a matter of construction, depending on the parties’ intention as revealed by the terms of the contract. For example, in Rhinegold Publishing v Apex Business Development, statutory demands were issued against Rhinegold Ltd and a related company, Tannhauser Ltd, for approximately £22,000 and £31,000 respectively. A settlement agreement followed under which the parties agreed to pay the sums due, but Tannhauser did not fully comply. Although the agreement was silent on liability, the High Court decided that, on a proper reading, the parties were jointly and severally liable. As a result, Rhinegold had to meet the...