Legal Practice Notes

A demand for payment A payment demand is a formal notice served pursuant to the contractual provisions that underpin the liability the issuing party intends to enforce. Such a demand is required where the contract expressly stipulates that issuing a demand is the step that crystallises a party’s duty to pay under the agreement. Situations in which this commonly arises include: where a creditor seeks to realise and enforce its security where there is a default under an ‘on demand’ facility where a party intends to rely upon or call on a guarantee; and where non-payment of a demand constitutes an event of default under the contract The effects and implications of issuing a demand may encompass: crystallising a cause of action that entitles a party to begin legal proceedings starting the running of the applicable limitation period fixing and confirming the date from which a lender’s right to repayment of the loan falls due;...

Tracker Use this Tracker to confirm if a state is a signatory to the Hague Convention on Choice of Courts Agreements and whether the Convention is already in effect for that jurisdiction. Albania — In force: 1 October 2024. Ratified: 25 June 2024. Signed: 13 February 2024. HCCH website: Albania—the Convention enters into force; HCCH website: Albania signs the Choice of Court Agreements Convention; HCCH notification: Albania ratifies the Choice of Court Agreements Convention. Australia — Signed: No. The Joint Standing Committee on Treaties in 2017 backed accession to the Convention and advised that binding treaty action be undertaken. For information, see Australian Parliament— Convention on Choice of Courts accession. Bahrain — In force: 1 July 2025. Acceded: 13 March 2025. For information, see: Bahrain accedes to the Choice Of Court Convention. China — Approval, ratified or...

This Practice Note aims to outline the principal distinctions between Scots law and English law concerning the creation of fixed security over land and buildings. These differences extend from the forms of security that can be taken over real property, to the ways in which such security is perfected and the significance of those perfection requirements. For broader guidance on taking security over land and, in particular, the position in England and Wales, see Practice Note: Taking security over land. Land and buildings A helpful place to begin is by considering what is meant by land and buildings for the purposes of fixed security. Under Scots law, a standard security can be taken as fixed security over property owned outright (heritable property) or property held under a lease. For leasehold property, a lease for a term of 20 years or less cannot be...

This Practice Note outlines consumer credit law following the shift of regulatory supervision to the Financial Conduct Authority ( FCA). It considers key changes affecting insolvency practitioners ( IPs). For further reading on consumer credit agreements, see Practice Notes: Regulated activities relating to consumer credit and The FCA consumer credit regime: an overview of rules on arrears, default and recovery... Regulatory oversight From 1 April 2014, oversight of consumer credit moved from the Office of Fair Trading ( OFT) to the FCA. As part of this transition, the OFT licensing scheme under the Consumer Credit Act 1974 ( CCA 1974) was replaced by the FCA’s authorisation regime under Part IV( A) of the Financial Services and Markets Act 2000 ( FSMA 2000)... If a firm had: a consumer credit licence on 31 March 2014; and applied before 1 April 2014 for interim...

It has long been standard for administrators and liquidators to try to cap their personal liability when entering contracts on a company’s behalf. In addition, office-holders frequently seek to limit liabilities incurred during an administration or liquidation where such liabilities would otherwise rank as an expense of the process. Expense claims sit only behind fixed charge claims and, in many cases, come ahead of the insolvency office-holder’s remuneration. This Practice Note considers the use of exclusion clauses intended to contract out of expense claims, summarising the history of the practice, the practical issues that may arise, and points for counterparties to weigh when agreeing such terms... Background to the practice In the course of an administration or liquidation, an office-holder may enter into numerous contracts for the company while exercising their powers and functions. The two principal categories are those for the...

Rationale In any cross-border matter involving a formal insolvency process, restructuring advisers will consider which jurisdictions are open for proceedings and weigh the respective pros and cons of each (see Practice Note: Table of advantages and disadvantages of restructuring in various jurisdictions worldwide). As the concept of a centre of main interests ( COMI) appears in Regulation ( EU) 2015/848, the Recast Regulation on Insolvency [ EU Recast Regulation on Insolvency], and the UNCITRAL Model Law on Cross- Border Insolvency (see: UNCITRAL Model Law and Cross- Border Insolvency Regulations 2006 ( CBIR)—overview), practitioners may, where time allows, explore forum shopping—also called ‘insolvency tourism’ or ‘jurisdictional arbitrage’—to shift a company’s COMI, regardless of its place of incorporation or registered office, to a jurisdiction with a more favourable restructuring or insolvency framework. Ironically, the incidence of forum shopping has grown since these...

This Practice Note This Practice Note reviews how farming enterprises are structured and financed, the forms of security they may grant, and the enforcement avenues open to creditors. It also examines the risks and considerations before commencing enforcement within the agricultural sector (including matters tied to a lender’s collateral); the operational and practical challenges on the appointment of an insolvency practitioner, and the factors relevant to deciding whether trading should continue. The UK farming sector covers roughly 70% of the nation’s land and helps preserve landscapes of cultural significance. The sector is commonly divided into three principal areas: dairy, arable and livestock. Of total farmland, about 70% is owner-occupied, with the remainder let to tenants. Many farmers rely on subsidies to keep operating. For some, as much as 50% of their receipts are subsidy payments, leaving smaller holdings especially exposed....

The Land Registration Act 2002 ( LRA 2002), succeeding the Land Registration Act 1925, empowers HM Land Registry to continue maintaining the register of title to land in England and Wales. For each title, the register comprises a property register and a proprietorship register and, where needed, a charges register. Historically, HM Land Registry provided a paper land certificate (or, where the property was charged, a charge certificate) to the registered proprietor as proof of ownership; these were rendered obsolete when the LRA 2002 commenced. Ownership is now demonstrated by official copies of the register. See Practice Note: How to obtain official copies of the register from HM Land Registry. This Practice Note considers the separate registers of title, the effect and conclusiveness of registration, and the owner’s powers under the LRA 2002. Property...

This Practice Note explores certain matters that can arise when enforcing security by appointing a receiver over property held on trust. It also addresses trust considerations in the setting of security granted by a partnership. Several banks have experienced issues when relying on standard-form security documents where their client is a partnership and the secured property is either used by the partnership or constitutes a partnership asset. Commonly, enforcement pitfalls have not been anticipated when the security is taken, and the standard documentation has not been modified to accommodate this. Trusts of land HM Land Registry’s Land Register records ownership of the legal estate in land—the ‘paper title’—that is, the rights of the registered proprietors to execute a valid transfer passing ownership to another person. The Land Register does not record the beneficial (equitable) interest and, as a result, the Land Registrar is not fixed with...

What does this Practice Note cover? This Practice Note summarises the main credit event types in the 2014 ISDA Credit Derivatives Definitions (the 2014 Definitions). It sets out how each event is triggered and applied in practice, and why they matter for credit derivative trades. What are credit events? A credit derivative aims to give the buyer protection against specified credit events affecting the underlying reference entity to the trade. These events are listed in the transaction confirmation. As the credit derivatives market is largely standardised, confirmations typically apply the same credit events to the same reference entities by incorporating the International Swaps and Derivatives Association ( ISDA) Credit Derivatives Physical Settlement Matrix (the Matrix). Reference entities are grouped into ‘transaction types’ by where the reference entity is located. For example: Sony Corporation would fall within the Standard Japan Corporate transaction type; and the Kingdom of Spain would be a...

A- Z of striking off, dissolution and restoration This glossary provides concise explanations of commonly used terms and expressions in the context of a company’s striking off, dissolution and restoration... Administrative restoration — Introduced by the Companies Act 2006 ( CA 2006), this is a simpler method to return to the register a company removed by the Registrar of Companies, without needing a court application. It is available only when specific conditions are met. It took effect on 1 October 2009. For further information see Practice Note: Company restoration—administrative restoration. Compare with restoration by court order... Bona vacantia — A Latin term meaning ‘ownerless goods’. Where a company is dissolved while still owning, or holding an interest in, property, that property is treated as bona vacantia (that is, it is ‘vacant’ and without a legal owner) and passes to the Crown. In such a case the...

Accumulated debt, coupled with economic upheaval or a climatic or other external jolt to a nation, can precipitate a crisis severe enough to push creditors to explore legal avenues for recovery. In the language of finance, such disruption will typically amount to an event of default. Where to sue? Following an event of default on, for instance, bond obligations, sovereigns commonly formalise the existence of a public emergency by passing legislation or issuing an executive order or decree. By way of illustration, amid Greece's crisis, Parliament adopted the Bondholders Act 4050/12. In those circumstances, domestic courts would refrain from striking down the default and the extraordinary steps taken by the sovereign's government in light of the national emergency confronting the country. Even where the debtor has waived sovereign immunity, that waiver is often circumscribed within its own...

The European leveraged finance loans market is renowned for its inventiveness and its capacity to pivot rapidly, shaping products that suit prevailing economic circumstances. Within this landscape, unitranche facilities have cemented themselves as a mainstay of the leveraged loans mid‑market. Their momentum has stemmed partly from the wave of private debt funds that have entered since the last financial crisis, and partly from today’s restrictions on the levels of leverage that regulated banks can support on individual deals. This adaptability sits at the heart of the market’s appeal. Typically, a single lender provides a unitranche; for larger transactions, a compact club may do so, and such facilities are not structured for syndication. In recent years a clear pattern has emerged, with a growing cohort of debt funds both willing and equipped to deliver jumbo‑sized unitranche...

The general principles Discretion as to costs Although disqualification proceedings have a penal flavour, they are nonetheless civil in nature, so the ordinary civil costs principles apply to them. The Court of Appeal’s decision in Re Pamstock makes plain that their quasi-penal character does not, of itself, warrant any special costs rules... Under CPR 44.2, the court has discretion as to costs in civil proceedings, and this equally governs disqualification cases. Where a matter proceeds to trial: If the hearing is completed within a single day, costs are usually dealt with by summary assessment immediately afterwards, and a schedule of costs should be prepared in advance for that purpose in line with the CPR. If the trial extends beyond one day, the usual direction is for a detailed assessment. CPR 44.2 also states the principle that “costs follow the event”......

Director disqualification orders A disqualification order is imposed to safeguard the public from individuals who, through dishonesty, naivety or incompetence, misuse their role and status as a director. In England and Wales, the criminal courts may impose a director disqualification order under the Company Directors Disqualification Act 1986 ( CDDA 1986) where: an offender has been convicted of an indictable offence, tried either on indictment or summarily, in connection with the promotion, formation, management, liquidation or striking off of a company; or an offender has been convicted of an offence involving a failure to file documents with, or give notice to, the registrar of companies and has also been the subject of three default orders or convictions in the preceding five years. Practitioners should therefore refer to the Sentencing Council’s offence specific guidelines, which set out when a director...

There are various types of share capital and the main differences are summarised below: Authorised share capital – Generally obsolete from 1 October 2009, as companies no longer require authorised share capital. Nevertheless, it can still be relevant to companies (i) incorporated under earlier legislation or (ii) where shareholders wish to restrict directors’ powers to issue and allot shares; in that situation, it sets the maximum number of shares that directors are permitted to allot. Issued share capital – Holders of issued shares are able to exercise their membership rights. Allotted share capital – Holders have an unconditional entitlement to be entered on the register of members (section 558 of the Companies Act 2006 ( CA 2006)), but they are not yet entitled to exercise membership rights. ......

Practice Note This Practice Note outlines circumstances in which a bankrupt's pre-bankruptcy general transfer of book debts lacks validity. See also Practice Note: Unenforceability of liens over books and records for related guidance......

A recurring scenario is that payments are made on account of dividends during a financial year, with the expectation of declaring a dividend at the year end. If the company fails, there are then no distributable profits from which a dividend can be declared and the on‑account payments, often treated as loans, are recoverable. In private companies, directors/shareholders are frequently advised to adopt this approach as a tax‑saving measure... When can dividends be declared? Under Part 23 of the Companies Act 2006 ( CA 2006), distributions may only be made to members out of profits available for that purpose. A company’s profits available for distribution are its accumulated, realised profits, so far as not previously applied by distribution or capitalisation, less its accumulated, realised losses, so far as not previously written off in a reduction or reorganisation of...

Avoiding a deal as an extortionate credit arrangement under the Insolvency Act 1986 ( IA 1986) is not really straightforward in practice at all. A tough or even unfair bargain, however, is not automatically extortionate in itself or by default. The jurisdiction appears to assume a marked imbalance in negotiating strength that one side has exploited. Accordingly, victories in such challenges are rare and seldom achieved indeed. Who may apply?......

How can a director be disqualified? There are several routes by which a director can be disqualified, spanning various provisions of the Company Directors Disqualification Act 1986 ( CDDA 1986) and the Insolvency Act 1986 ( IA 1986). These include disqualification on bankruptcy and through a bankruptcy restrictions order ( BRO) or a bankruptcy restrictions undertaking ( BRU). For further guidance, refer to the following Practice Notes: Practice Note: How can a director be disqualified as a company director? Bankruptcy restrictions orders and undertakings—overview This Practice Note is not intended to cover every restriction arising from a BRO, BRU or bankruptcy. For full details, see the separate Practice Note: Effect and duration of bankruptcy restrictions orders ( BROs). The scope here is limited to restrictions resulting from disqualification under CDDA 1986, section 6. It also excludes the restrictions under IA 1986, section 216...