Business Law & Practice Review 2003
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UK (England and Wales)
Restructuring and Insolvency 2006/07 Country Q&A UK (England and Wales) UK (England and Wales) Lyndon Norley, Partha Kar and Graham Lane, Kirkland and Ellis International LLP www.practicallaw.com/2-202-0910 SECURITY AND PRIORITIES ■ Floating charge. A floating charge can be taken over a variety of assets (both existing and future), which fluctuate from 1. What are the most common forms of security taken in rela- day to day. It is usually taken over a debtor's whole business tion to immovable and movable property? Are any specific and undertaking. formalities required for the creation of security by compa- nies? Unlike a fixed charge, a floating charge does not attach to a particular asset, but rather "floats" above one or more assets. During this time, the debtor is free to sell or dispose of the Immovable property assets without the creditor's consent. However, if a default specified in the charge document occurs, the floating charge The most common types of security for immovable property are: will "crystallise" into a fixed charge, which attaches to and encumbers specific assets. ■ Mortgage. A legal mortgage is the main form of security interest over real property. It historically involved legal title If a floating charge over all or substantially all of a com- to a debtor's property being transferred to the creditor as pany's assets has been created before 15 September 2003, security for a claim. The debtor retained possession of the it can be enforced by appointing an administrative receiver. property, but only recovered legal ownership when it repaid On default, the administrative receiver takes control of the the secured debt in full. -
Proposals for Mitigating the Short Term Effects on Viable Businesses of Covid-19
PROPOSALS FOR MITIGATING THE SHORT TERM EFFECTS ON VIABLE BUSINESSES OF COVID-19 1 INTRODUCTION 1.1 Many will have concerns about the short term impact that Covid-19 may have on businesses that would otherwise be viable (for example as a result of short term disruptions to supply chains or temporary reduced customer demand). We have therefore set out below a number of proposals, for discussion with the Insolvency Service, as to how some of the immediate effects of Covid-19 may be mitigated. 1.2 If the short-term impact of Covid-19 is not satisfactorily countered, and viable businesses are not preserved, there will be lasting damage to the wider economy. 1.3 Given our focus as City of London lawyers, we put forward our ideas by reference to the impact on the corporate sector but we are conscious of the importance of taking complementary measures to achieve stability amongst partnerships and other unincorporated businesses if the objectives articulated below are to be achieved. 1.4 We would be happy to discuss or expand on any of the comments made in this paper, if requested. 2 PROPOSALS 2.1 The objectives behind these proposals are: (a) to give businesses a short breathing space, to address a temporary disruption in revenue and to free them from the risk of a creditor presenting a winding up petition and all the consequences that flow from that, in which to deal with any short term liquidity or trading issues that they may suffer as a result of the Covid-19 situation; (b) to provide an additional mitigating factor in relation to wrongful -
Case Re Demaglass Ltd; Lewis V Dempster (10Th July 2002, Ch D, Unreported)
Recovering costs of litigation as an expense - further developments Technical Bulletin No: 9 Case Re Demaglass Ltd; Lewis v Dempster (10th July 2002, Ch D, unreported) Synopsis The spate of cases dealing with the question of whether an office holder can treat the costs of any litigation that s/he initiates or pursues as an expense payable in priority to other creditors shows no sign of abating. This is perhaps no surprise given that a number of issues were left unresolved by the Court of Appeal decision in Lewis v Inland Revenue Commissioners; Re Floor Fourteen Ltd [2001] 3 All ER 499. One such case, Re Demaglass Ltd; Lewis v Dempster (10th July 2002, Ch D, unreported) is the subject of this update. Topics covered: Liquidation expenses, litigation funding The Facts In Demaglass the liquidators of two companies which were in administrative receivership and liquidation applied for an order requiring the receivers to pay over specified sums out of floating charge realisations in their hands to enable the liquidators to fund investigations leading to possible litigation. For the purposes of the application, it was taken as read that floating charge assets have to be made available to pay liquidation expenses and liquidation preferential creditors. In other words, the correctness of the Court of Appeal's decision in Re Leyland Daf Ltd; Buchler v Talbot [2002] EWCA Civ 228, [2002] 1 BCLC 571 (see Technical Update 7/May 2002) was assumed (although it should be noted that the decision in Leyland Daf is currently under appeal to the House of Lords). -
Corporate Finance and Management Issues in Company Law
Corporate finance and management issues in company law Section C: Corporate management I Revised edition – 2008 A.J. Dignam J.P. Lowry This Study Guide was prepared for the University of London by: Alan Dignam, Reader in Corporate Law, School of Law, Queen Mary, University of London. John Lowry, Professor of Commercial Law and Vice Dean of the Faculty of Laws, University College London. This is one of a series of Study Guides published by the University. We regret that owing to pressure of work the authors are unable to enter into any correspondence relating to, or arising from, the Guide. If you have any comments on this Study Guide, favourable or unfavourable, please use the form at the back of this Guide. Publications Office The External System University of London Stewart House 32 Russell Square London WC1B 5DN United Kingdom www.londonexternal.ac.uk Published by the University of London Press © University of London 2009 The University of London does not assert copyright over any of the accompanying readings reproduced in this Study Guide, copyright in which is retained by the original publishers. However, a separate copyright vests in the format of these readings as a published edition and database rights may exist in their compilation. This copyright and any such database rights belong to the University of London. Printed by Central Printing Service, University of London All rights reserved. No part of this work may be reproduced in any form, or by any means, without permission in writing from the publisher. Contents Chapter 1 -
Singapore Judgments
This judgment is subject to final editorial corrections approved by the court and/or redaction pursuant to the publisher’s duty in compliance with the law, for publication in LawNet and/or the Singapore Law Reports. Encus International Pte Ltd (in compulsory liquidation) v Tenacious Investment Pte Ltd and others [2016] SGHC 50 High Court — Originating Summons No 1118 of 2014 Judith Prakash, J 12, 13 October 2015; 18 January 2016 Contract — Contractual terms — Entire agreement clauses Contract — Contractual terms — Implied terms Insolvency law — Avoidance of transactions — Transactions at an undervalue Insolvency law — Avoidance of transactions — Unfair preferences Insolvency law — Avoidance of transactions — Transactions contrary to anti-deprivation principle Credit and security — Equitable mortgage 31 March 2016 Judgment reserved. Judith Prakash J: Introduction 1 The plaintiff, Encus International Pte Ltd (“the Company”), is a company in liquidation. By this application, it seeks to recover a valuable asset, Encus International Pte Ltd v [2016] SGHC 50 Tenacious Investment Pte Ltd namely, shares in another company. The Company seeks a declaration that the transfer of these shares to the first defendant has to be annulled as an unfair preference or as a transaction at an undervalue or because it was carried out in breach of the anti-deprivation principle. 2 In May 2013, the Company transferred 1,772,728 ordinary shares in a company called DKE Precision Pte Ltd (“DKE”) to the first defendant, Tenacious Investment Pte Ltd as nominee for the second to sixth defendants. I shall henceforth refer to the shares as the “DKE Shares” and to the second to sixth defendants and one Mr Tan Piak Khiang (“Mr Tan”) as the “Investors”. -
IHL164 P77-79 Insolv 30/9/08 15:07 Page 77
IHL164 p77-79 insolv 30/9/08 15:07 Page 77 INSOLVENCY AND CORPORATE RESTRUCTURING Jones Day The winner takes it IT IS A SAD TRUTH THAT THE COLLAPSE OF ONE ■ retention of its rights over the goods, even when company in a supply chain can have severe they have been incorporated into other goods all: how forward consequences on the rest of the chain. While a (mixed-goods clause). solvent company may be able to cope with one planning can minimise insolvent trading partner, the collapse of several, as However, great care must be taken, especially with may well be the case over the next few months, the proceeds-of-sale clause, that the reservation is a bad debt position could really rock an otherwise steady company. The not deemed to be a charge over book debts, which other problem is that as companies head towards would be invalid against an officeholder, if not insolvency, they become more reluctant to deal with registered. their creditors and more likely to generally bury their heads in the sand. Further, the supplier needs to ensure that it also takes auxiliary rights to allow the ROT clause to This article provides some practical guidance by function. For example, the supplier needs to be able BY VICTORIA which, hopefully, businesses can limit their exposure to enter the buyer’s premises to reclaim the goods FERGUSON to companies in financial distress, or else increase the and the buyer must be required to store the items associate, chances of maximising their recoveries from debtors. separately and identifiably. -
Can a Struggling Company Ever Justify Paying Some - but Not All - of Its Creditors?
CAN A STRUGGLING COMPANY EVER JUSTIFY PAYING SOME - BUT NOT ALL - OF ITS CREDITORS? In light of the financially fragile state some businesses are finding themselves in as result of COVID-19, we discuss in this briefing note when – if ever – payments or other benefits can be given to some creditors but not others, and when such a transaction might fall foul of the unlawful preference provisions of UK insolvency legislation. This is a fast-moving area and this briefing note sets out the position as at 7 April 2020. WHY ARE TRANSACTIONS CHALLENGED? When a company enters a formal insolvency procedure, the insolvency practitioner appointed Unlawful preference as liquidator or administrator of the company will review the transactions into which the transactions can be company entered in the run-up to its insolvency. They will then assess whether any of those unwound, leading to transactions might be challenged under the ‘antecedent transactions’ provisions of UK court orders to repay insolvency legislation. This provides an opportunity to bring money or other assets back into funds or return the company’s estate, which increases the pool of assets from which a distribution can be property. made to the company’s creditors. WHAT IS AN UNLAWFUL PREFERENCE? An unlawful preference can be challenged by an administrator or liquidator under section 239 of the Insolvency Act 1986 (the “Insolvency Act”). Under these provisions, a company gives a preference if: • the company does anything (or suffers anything to be done) which has the effect of putting -
Durham E-Theses
View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Durham e-Theses Durham E-Theses An Analysis of the Statutory Regulation of Fraudulent Trading SKUDRA, HENRY,MIKOLAJ How to cite: SKUDRA, HENRY,MIKOLAJ (2012) An Analysis of the Statutory Regulation of Fraudulent Trading, Durham theses, Durham University. Available at Durham E-Theses Online: http://etheses.dur.ac.uk/3642/ Use policy The full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-prot purposes provided that: • a full bibliographic reference is made to the original source • a link is made to the metadata record in Durham E-Theses • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders. Please consult the full Durham E-Theses policy for further details. Academic Support Oce, Durham University, University Oce, Old Elvet, Durham DH1 3HP e-mail: [email protected] Tel: +44 0191 334 6107 http://etheses.dur.ac.uk An Analysis of the Statutory Regulation of Fraudulent Trading Henry Mikolaj Skudra University College, University of Durham Research conducted at Durham Law School, University of Durham This thesis is submitted in fulfilment of the requirements for the degree of Master of Jurisprudence. November 2011 Copyright Declaration All rights reserved. No part of this thesis may be reproduced or transmitted, in any form or by any means, or stored in any retrieval system of any nature, without prior written permission. -
Commemorating the Launch of Dentons Rodyk
Reporter Issue 05/2016 Commemorating the launch of Dentons Rodyk Dentons Rodyk celebrated its launch on June 21, 2016, with a dinner for its clients at the historic The Clifford Pier restaurant in the Fullerton Bay Hotel. Philip Jeyaretnam, SC, Dentons Rodyk Regional In this issue... CEO and Global Vice Chair, addressed the guests. He Commemorating the launch of shared his vision for the Dentons Rodyk............................................1 firm and recounted the Toast by Dentons Global Chairman Joe Andrew and Global CEO Elliott Business Bulletins journey leading up to the Portnoy, Philip Jeyaretnam, SC, Dentons Rodyk Regional CEO and Global Vice Chair, and members of Dentons Rodyk Exco. launch of Dentons Rodyk. Challenges that HR professionals face in Singapore......................................2 Nearly 200 clients attended the Duties and responsibilities of dinner event, together with 25 independent directors - members of Dentons’ Global Board, An overview ................................................3 including Global Chairman Joe Andrew and Global CEO Elliott Grant of security - Portnoy. Present as guests of honour Not so secure anymore?.........................7 were Minister of Home Affairs and International focus - Law K Shanmugam and Senior Taking security over real estate Minister of State for Finance and Law Dentons Rodyk clients and guests celebrating the in the Commonwealth of Indranee Rajah. launch with us at the Fullerton Bay Hotel. Independent States ................................9 This was an opportunity to reinforce IP Edge the value that the combination Personal data protection .....................11 brings to our clients: the ability to follow them across the world, and Litigation Brief enhancing our firm’s ability to service our clients from the Asia Pacific Recognising foreign insolvency proceedings arising in region with more than 7,300 lawyers, jurisdictions other than the more than 9,500 timekeepers and place of incorporation ..........................12 more than 13,500 people, working from 143 locations worldwide. -
Its Effect on Ipso Facto Clauses and Other Matters
Omnibus Insolvency, Restructuring and Dissolution Act: Its Effect on Ipso Facto Clauses and Other Matters The long-awaited omnibus Insolvency, Restructuring and Dissolution Act 2018 (IRDA) comes into force on 30 July 2020. As an omnibus Act, the IRDA collates the disparate – Extending liability for wrongful trading; and provisions on insolvency, restructuring and – Permitting a liquidator or judicial manager to dissolution applicable to corporate entities and assign the right to bring an action under the individuals and consolidates them into one statute. various avoidance provisions and insolvency While the IRDA is substantially a consolidating offences to third party funders. statute preserving most of the provisions that have been collated under its ambit, it does effect a number of significant changes. One of these is Restrictions on Ipso Facto Clauses the establishment of a new licensing and regulatory Section 440 of the IRDA imposes a stay on the use framework for insolvency practitioners. Other of ipso facto clauses. This provision has however changes, in particular those relating to the provisions been crafted so that its effect has been carefully on corporate insolvencies and restructurings, are targeted to prevent a contractual counterparty also of equal, if not more, significance for enhancing from terminating or modifying a contract upon the the role of Singapore as a hub for corporate occurrence of certain trigger events only, including restructurings and insolvencies. the insolvency or restructuring of a company. The We discuss the noteworthy changes in greater impact of the drafting is that companies may be detail below. These changes include the following: incentivised to apply for restructuring via a scheme – Introducing a new stay on the use of ipso of arrangement or judicial management before a facto clauses; default has occurred under their contracts, rather than wait for the default to occur. -
Suspension of Wrongful Trading Rules: What It Means for Businesses
ALERT MEMORANDUM Suspension of wrongful trading rules: what it means for businesses March 31, 2020 If you have any questions concerning this memorandum, please reach out to The UK Government announced on Saturday, 28 March your regular firm contact, the 2020 that it intends to amend insolvency law to suspend following authors or our COVID-19 task force directly by clicking here. the offence of wrongful trading by directors of UK companies. The measure is aimed at giving companies For more information, please consult the COVID-19 Resource Center. breathing space and avoiding premature insolvencies by allowing directors to keep businesses going without the LONDON threat of personal liability. David Billington +44 20 7614 2263 What is wrongful trading and why does it matter? [email protected] Jim Ho The current insolvency rules provide that directors of limited liability +44 20 7614 2284 companies can become personally liable for business debts if they allow [email protected] the company to continue to trade once insolvent administration or Polina Lyadnova liquidation becomes unavoidable. Under the current wrongful trading +44 20 7614 2355 [email protected] provisions found in the Insolvency Act 1986 (ss. 214 and 246B IA86), upon concluding that there is no reasonable prospect of the company Bianca Buzatu +44 20 7614 2234 avoiding insolvent liquidation or administration, a company director has a [email protected] duty to take every step to minimise potential loss to the company’s creditors. The court may order a director that is found liable of wrongful trading to make a personal contribution to the company’s assets in the amount the court thinks proper in light of the loss suffered by the company’s creditors. -
Company Lawyer Case Comment Recovering Costs of Litigation As A
Page1 Company Lawyer 2003 Case Comment Recovering costs of litigation as a liquidation expense Adrian Walters Subject: Insolvency Keywords: Administrative receivership; Expenses; Floating charges; Liquidators; Winding up Legislation: Insolvency (Amendment) (No. 2) Rules 2002 (SI 2002 2712) Insolvency Rules 1986 (SI 1986 1925) r.4 .218, s.4 .220(2) Cases: Demaglass Ltd (In Liquidation), Re [2002] EWHC 3138 (Ch); [2003] 1 B.C.L.C. 412 (Ch D) Lewis v Inland Revenue Commissioners [2001] 3 All E.R. 499 (CA (Civ Div)) Toshoku Finance UK Plc (In Liquidation), Re [2002] UKHL 6; [2002] 1 W.L.R. 671 (HL) *Comp. Law. 84 Further developments The spate of cases dealing with the question of whether a liquidator can treat the costs of any litigation that she initiates or pursues in the exercise of her statutory functions as a liquidation expense payable in priority to other creditors shows no sign of abating. This is hardly surprising bearing in mind that a number of issues were left unresolved by the Court of Appeal in Re Floor Fourteen Ltd, Lewis v Inland Revenue Commissioners. 1 One such case, Re Demaglass Ltd, Lewis v Dempster 2 is the subject of this note. The likely implications of the Insolvency (Amendment) (No. 2) Rules 20023 are also briefly considered. Facts In Demaglass, the relevant companies were concurrently in administrative receivership and liquidation. The liquidators applied for an order requiring the receivers to pay them a sum out of floating charge realisations to enable the liquidators to fund an investigation with a view to possible litigation. It was taken as read that liquidation expenses are payable out of floating charge assets in the hands of an administrative receiver.