Legal Practice Notes

This Practice Note explores the contours of the reflective loss rule. It reviews the history and effects of the bar on reflective loss, pointing to the leading authorities that shaped it, namely Prudential Assurance v Newman Industries, Johnson v Gore Wood, Giles v Rhind and Marex v Sevilleja. It also highlights practical points sensibly borne in mind if you act for a shareholder and/or are engaged in a claim where the rule could be relevant. Summary of the rule against reflective loss The rule traces its origin to the principle in Foss v Harbottle: ie, where an actionable wrong is done to a company, the company is the proper claimant to recover any loss caused by that wrong. Put another way, where a duty owed to a company is breached and the company suffers loss, only the company may bring proceedings in respect of that loss. The...

This Practice Note considers the use of artificial intelligence ( AI) and allied tools when preparing to give disclosure to opposing parties. It draws no distinction between disclosure under the disclosure scheme used in the Business and Property Courts and disclosure under Part 31 of the Civil Procedure Rules. The priority is to save time and costs without undermining the dependability of the disclosure produced. Why AI works in disclosure AI and related tools can be effective for disclosure because the task is often predictable. Similar kinds of disputes typically generate similar categories of documents tied to the particular issues in contention. Naturally, there will be variations from case to case, yet these do not diminish the role of AI tools. Such tools are attractive to legal advisers conducting disclosure as they reduce human effort and thus cost, while creating an audit trail to...

Convening hearing Under section 896 of the Companies Act 2006 ( CA 2006), the court may require that a meeting of creditors, or any class of them, or of members, or any class of members, be called in whatever manner it directs. A request to convene such a meeting can be made by the company itself, any creditor or member, or, if the company is in winding up or administration, by its liquidator or administrator. Where a scheme is proposed within 12 weeks of a moratorium under the Corporate Insolvency and Governance Act 2020 ( CIGA 2020), those holding any moratorium debts and any pre-moratorium debts for which there was no payment holiday during the moratorium effectively possess a veto over the scheme: the court must not approve a scheme that contains provisions relating to such creditors without their agreement (see Practice Note:...

An early warning of financial difficulty is commonly a breach of covenants by the business. Lenders may consent to a straightforward waiver to remedy a short-term dip in performance, or it may indicate the prospect of a broader restructuring. It is vital to review how frequently covenants are tested and, if the company is unlikely to meet the next test, seeking a covenant waiver could be sensible. Options A covenant waiver or reset is a milder step than the following options: equity injection (in exchange, the equity provider typically requests a covenant holiday or a relaxation of covenants) (see Practice Note: New money and equity injections in a restructuring situation) sale of non-core assets refinancing by new lenders debt restructuring (see Practice Note: Debt waivers, extending maturity and debt rescheduling) debt for equity swap (see Practice Note: Debt for equity...

This Practice Note reviews the key issues when seeking to enforce a judgment of the courts of England and Wales beyond the jurisdiction (with Scotland and Northern Ireland treated as outside the jurisdiction). It outlines the enforcement regimes that may apply in a particular country and examines how those regimes may define ‘judgment’ differently. For simplicity, references to England and Wales/ English/ Welsh are shortened to England and English in this Practice Note. General considerations When enforcing an English court judgment outside the jurisdiction, there are several practical points to address: whether a reciprocal enforcement regime (ie a formal arrangement) exists with the country where enforcement is sought: for guidance on the possible regimes, see: Enforcement regimes below note that different regimes may use different terminology for what...

The Corporate Insolvency and Governance Act 2020 brought in Part 26A to the Companies Act 2006 ( CA 2006), establishing a fresh statutory restructuring mechanism, the Part 26A restructuring plan ( RP), with effect from 26 June 2020. The regime is complemented by the relevant Practice Statement (see Practice Note: The Practice Statement for Part 26 schemes and Part 26A restructuring plans (2025)) and by the Explanatory Notes issued by the Department for Business, Energy and Industrial Strategy (now the Department for Business and Trade), which Snowden J in Re Virgin Atlantic Airways, applying Re Flora v Wakom ( Heathrow) Ltd, confirmed, per Snowden J, are admissible as an interpretative aid notwithstanding even without proving ambiguity or obscurity. The seminal Court of Appeal ruling, Strategic Value Capital Solutions Master Fund LP v AGPS Bond Co plc (referred to here as Adler), offers...

Before any appointment is made, the central matter to agree with the nominated liquidator is the company’s real position on solvency. For further detail, see Checklist: Directors' due diligence questionnaire and guidance before swearing a statutory declaration of solvency for a members' voluntary liquidation. Documents and information to be provided to the liquidator by the company To confirm the company’s true financial standing, provide the nominated liquidator with the following: a current schedule of the company’s assets and liabilities. Where the company has ceased trading, compile the schedule up to the date trading ceased......

Limitation periods Limitation periods describe the window within which a claim must be issued. The rules are contained in the Limitation Act 1980 ( LA 1980), which sets out different time limits for various causes of action. In an insolvency setting, claims are commonly grouped into three types: actions founded on a 'speciality' carry a 12-year period. Speciality claims include those arising from a statutory cause of action and typically concern recovery of property, such as setting aside a transaction in insolvency where the remedy is not simply the payment of money claims to recover a sum of money under statute have a six-year period claims for which no limitation period applies A limitation clock will usually start on the date the cause of action accrues. That position applies where the claim stems from the debtor’s own cause of action. For...

This Practice Note addresses matters arising where a tenant is insolvent, including surrender, sureties, subtenants, charges, access to the premises, goods the tenant has left behind and HM Land Registry’s requirements. Agreeing a surrender is often the swiftest route for a landlord to recover possession of the premises from an insolvent tenant. It serves to avoid the additional preconditions that must be satisfied before forfeiture can take place (eg the need for a court order or the administrator’s consent where the tenant is in administration). For more on the various forms of insolvency, see Practice Note: Quick guide to property insolvency. Landlords will typically be under pressure to complete any surrender swiftly. To avert difficulties arising at a later date, however, the following issues ought to be considered. How surrender operates There are two ways a surrender may arise: express and implied. For the...

Incorporated v unincorporated charities Charities commonly adopt a range of incorporated and unincorporated forms. Corporate forms eligible for charitable status include: a charitable company (almost always a company limited by guarantee) a co-operative society or community benefit society (formerly termed industrial and provident societies) charity trustees incorporated under Part 12 of the Charities Act 2011 ( CA 2011) a charitable incorporated organisation (ie the limited-liability model created by Part 11 of CA 2011), requiring registration solely with the Charity Commission a body corporate established by Act of Parliament or Royal Charter (eg the Official Custodian for Charities) Unincorporated charities take one of two forms: a charitable trust; or a charitable unincorporated association Charitable company A charitable company may enter into contracts, execute deeds and issue other documents in the same way as any company formed under the Companies Acts......

Disclaimer Pursuant to sections 178 and 315 of the Insolvency Act 1986 ( IA 1986), a liquidator or a trustee in bankruptcy (the trustee) may disclaim property of the company or the bankrupt where it is regarded as onerous. This Practice Note focuses on the liquidator’s role, though the same principles apply to a trustee. For fuller guidance on disclaimer—its nature and the steps to implement it—see: Disclaimer—overview Practice Note: The process of disclaimer by a liquidator or trustee in bankruptcy under sections 178 or 315 of the Insolvency Act 1986 Practice Note: The effect of disclaimer by a liquidator or trustee in bankruptcy on property and third parties This Practice Note sets out what is treated, in practice, as ‘onerous’ for these purposes. What is onerous property?......

Company directors, and in certain circumstances shadow directors, are subject to a wide range of obligations owed to the company. Over centuries, the courts have shaped many of these obligations from broader common law doctrines and equitable standards, while others also have subsequently been codified in legislation. This Practice Note examines the director’s statutory obligations set out in sections 171 to 177 of the Companies Act 2006 ( CA 2006), commonly referred to as the general duties......

Grounds to challenge an individual voluntary arrangement You may apply to contest the approval of an individual voluntary arrangement ( IVA) on either or both of two bases: that the creditors’ resolution endorsing the IVA unfairly harms the interests of a creditor of the debtor that a material irregularity occurred at, or connected with, the creditors’ decision process The onus of proving any such ground lies with the challenger. Be aware that the new IVA Protocol covers all consumer IVAs proposed on or after 1 July 2025, reshaping the context in which these challenges will be assessed. This will influence how any application is viewed in practice......

Special administration regimes A special administration regime ( SAR) is an adapted insolvency process that confers particular objectives on the administrator. SARs typically apply in sectors delivering statutory or public services or supplies, for example water or energy, where keeping the essential service running is paramount or vital to economic stability. The administrator’s special aims commonly put the uninterrupted provision of the service or supply first, or oblige consultation with the appropriate regulator (eg the Financial Conduct Authority), or require the protection of specified assets (eg client assets under an investment bank special administration). This Practice Note highlights several principal SARs operating in England and Wales and outlines the core legislation governing each. The framework for a regime will usually comprise a primary Act (for instance, the Energy Act 2011 ( En A 2011)) supported by procedural rules (for instance, the Energy Supply Company Special...

Signing Signing marks a key stage in a finance transaction. It is the point at which the parties sign the agreed forms of the documents and the deal becomes binding (although, in some cases, this is subject to conditions precedent—see Practice Note: Conditions precedent). It usually happens before, or at the same time as, completion (often called ‘closing’), which is when funds are transferred between the parties and the transaction is ‘completed’. In a straightforward corporate facility, this means money moving from the lender to the borrower. In other financing arrangements, such as acquisition or asset finance, funds will typically pass from the lender(s) to the borrower and then from the borrower (as purchaser) to the seller of the business or asset. For more on signing and completion in loan transactions, and the tasks lawyers commonly undertake during this phase, see Practice Note: Signing and...

This Practice Note covers: debt rescheduling—lengthening the amortisation/repayment timetable so the company can weather short-term financial strain. The purpose of rescheduling is to set a more achievable debt burden or a period within which repayment is feasible. A firm without cash to meet wages or supplier invoices will struggle to survive. Adjusting the schedule may allow the business to stabilise and frequently boosts the lenders’ overall recovery on their investment, as businesses are usually more valuable when trading successfully than when dismantled or broken up. In many cases, enabling continued trade by rescheduling supports recovery and preserves value for lenders debt waivers—the lender consents to discharge the borrower from having to repay part or all of sums owed. This typically happens where the lender accepts there is minimal or no realistic chance of full repayment to it at all in such...

Regulated tenancies Regulated tenancies—often referred to as protected, statutory or fair rent tenancies—arise under the Rent Act 1977 ( RA 1977) and constituted the chief private residential tenancy type until 15 January 1989. Where a tenancy was granted on or after 15 January 1989, when the Housing Act 1988 took effect and assured tenancies became the prevailing private residential model, inclusion within RA 1977 is possible only in narrowly defined situations. Nevertheless, a considerable proportion of protected tenancies persists and, if they are not properly recognised, a purchaser acquiring property subject to a regulated tenancy may pay too much and be unable to achieve vacant possession. RA 1977 tenancies carry very strong security; in the majority of cases the landlord must await the tenant’s departure, though the parties may sometimes negotiate a surrender in exchange for a financial incentive. Be aware that, although several...

What is an administrative receiver? The Insolvency Act 1986 ( IA 1986) provides that an administrative receiver is: a receiver or manager of all, or substantially all, of a company’s property, appointed by or on behalf of the holders of any company debentures secured by a charge which, when created, was a floating charge, or by that charge together with one or more other securities; or a person who would meet that description but for the appointment of another individual as the receiver of part of the company’s property Powers An administrative receiver holds all powers granted by the instrument under which they were appointed and, so far as not inconsistent with that instrument, those specific powers set out in Schedule 1 of the Insolvency Act 1986. Anyone dealing with an administrative receiver in good faith and for value need not enquire whether they are acting within the scope of their...

2012: Key Restructuring & Insolvency cases [ Archived] This Practice Note has been archived and is no longer maintained. Parties/citation(s) Judgment date Subject Lexis®PSL analysis Appleyard v Wewelwala [2012] EWHC 3302 ( Ch), [2012] All ER ( D) 285 ( Nov); 23 November 2012; Bankruptcy expenses; The gap in a trustee in bankruptcy’s expenses— Appleyard v Wewelwala Wright Hassall LLP v Morris (administrator of Marketbalance Ltd and another) [2012] EWCA Civ 1472, [2012] All ER ( D) 198 ( Nov); 15 November 2012; Administrator’s liability under a conditional fee agreement; Administrator personally liable for solicitors’ costs under a conditional fee agreement Neumans LLP v Andronikou and others Re Portsmouth City Football Club Ltd (in liquidation) [2012] EWHC 3088 ( Ch), [2012] All ER ( D) 34 ( Nov); 2 November 2012; Solicitors’ costs in winding-up proceedings; How can solicitors ensure payment when acting on...

Liquidation Following enforcement of security by fixed charge creditors for their own benefit, the order of distributions in a winding up is: if liquidation commences within 12 weeks of a moratorium, any unpaid moratorium debts and ‘priority pre‑moratorium debts’ to which no payment holiday applied during the moratorium expenses properly incurred in the winding up (including the liquidator’s remuneration) ordinary preferential debts secondary preferential debts the prescribed part for unsecured creditors (where not disapplied) debts secured by floating charges unsecured debts statutory interest postponed debts (i.e. non‑provable liabilities) return of any surplus to members (subject to adjustment between members) For further details, see Practice Note: Waterfall of payments in liquidation......