What is the “key” to validly appointing administrators?

By Rachael Markham on January 16, 2020 Posted in UK

First, there was the HMV case, then Skeggs Beef and SJ Henderson. Following which we had further judicial decision in All Star Leisure and now Keyworker Homes, all of which considered the validity of appointment of administrators using the e-filing system.

Keyworker Homes deals with these questions:

Can a notice of intention to appoint administrators be e-filed out of court hours?
How is the ten day time period in paragraph 28 (2) of Schedule B1 of the Insolvency Act 1986 (the “Act”) calculated following filing a notice of intention appointment?
Can directors e-file a notice of appointment out of court hours?

We look at the answers to those, and consider some of the issues that the answers create.

Directors may be entitled to a refund of payments made in settlement of the HMRC loan charge

By Charles Draper and Rachael Markham on January 13, 2020 Posted in UK

Following an independent review of HMRC’s loan charge the UK Government has announced that there will be a number of changes to the loan charge, which in some cases will include repayment.

Not only will some directors be able to claim back payments made in settlement, others will be able to take advantage of more flexible ways to pay.

In brief, the notable changes are:

the loan charge will not apply to outstanding loans made before 9 December 2010
the loan charge will not apply to outstanding loans made in any tax years between 9 December 2010 and before 6 April 2016 where the avoidance scheme use was fully disclosed to HMRC and HMRC did not take action (for example, opening an enquiry); and
people can now elect to spread the amount of their outstanding loan balance evenly across 3 tax years

In cases where the loan charge does not apply, HMRC will refund voluntary payments made under settlement agreement reached since March 2016.

In this blog, we consider the practical implications of these changes for directors and also what impact they will have on claims against directors in the context of insolvency.

New Year, New Resolutions and New Name

By Rachael Markham and Mark Salzberg on January 9, 2020 Posted in Cross Border, EU, UK, US

Happy New year to all of our blog readers!

With the start of a new decade, we are giving our restructuring and insolvency blog a fresh new look and name: Restructuring GlobalView.

Restructuring GlobalView will provide readers with unique perspectives on restructuring and insolvency issues from around the globe, offering practical views from the global practice on topics of relevance and importance to the restructuring market.

If you are a current subscriber, you do not need to re-register to continue to receive updates but we encourage your colleagues and contacts to sign up.

For a chance to catch up on what you may have missed in 2019 see our New Year’s resolutions.

Does e-filing administration appointment documents give you a headache?

By Phillipine Wiegand-Forson and Rachael Markham on December 19, 2019 Posted in UK

Causer v All Star Leisure (Group) Ltd [2019] EWHC 3231 (Ch) (Causer) is yet another case which highlights the issues that e-filing can cause for practitioners when using the system to appoint administrators.

The decision in Causer followed Skeggs Beef in concluding that whilst the appointment of an administrator by a QFCH out of hours using the e-filing system is defective it is a defect capable of remedy. The case is nevertheless worthy of note because:

(a) it is a further reminder that when a QFCH wishes to appoint administrators they must follow the out of hours procedure set out in the Insolvency Rules 2016. Failure to do so will inevitably incur the costs of an application to remedy the defect; and

(b) it highlights a number of issues that e-filing creates, which we discuss further below. (In fact, in this case it appears that IT problems contributed to the defective appointment).

Cannabis and Bankruptcy: 2019 in Review

By Mark Salzberg on December 17, 2019 Posted in US

Courts struggled this year to find a balance between state-licensed cannabis activity and the federal right to seek bankruptcy protection under the Bankruptcy Code. During 2019, we had the first circuit-level opinion in the bankruptcy/cannabis space that appeared to open the door to bankruptcy courts, albeit slightly. We also had lower court opinions slamming that door shut. Below, we look at a few of the most important decisions issued throughout 2019 and analyze the current state of the law.

What impact does the General Election have on the proposed return of Crown preference?

By Rachael Markham and Robert O'Hare on December 11, 2019 Posted in UK

HM Revenue & Customs The government announced its intention to reinstate HMRC as a secondary preferential creditor in the 2018 Autumn Budget. Following consultation on this policy, the draft Finance Bill 2019/2020 was published. It was then subject to further technical consultation.

Usually a policy is confirmed (or delayed or abandoned) in the Autumn Budget and if confirmed, will be included in the Finance Bill that is published shortly after the Budget. The legislation then proceeds through Parliament and the Bill is enacted as the Finance Act in the following spring before the end of the fiscal year.

We expected the Autumn Budget to reconfirm the proposal to reintroduce Crown preference and had it done so, the final form legislation would have been included in a Finance Bill 2019-20. That Finance Bill would currently have been making its way through Parliament and could have expected to obtain Royal Assent, becoming the Finance Act 2020, before the end of March 2020.

However, Parliament was dissolved on 6 November 2019 for an early general election. The Budget (scheduled for 6 November) was cancelled and the timetable halted. Does this mean that there won’t be a Finance Act 2020 or that it will be delayed? In short, no.

What are the consequences of taking money from a rent deposit if the tenant company is in administration?

By Devinder Singh and Rachael Markham on December 5, 2019 Posted in UK

If administrators use leased property for the benefit of the administration, rent is payable to the landlord for the period of occupation, as an expense of the administration.

In London Bridge Entertainment, the court considered whether the administrators were obliged to top up a rent deposit where the landlord had taken monies from the rent deposit and applied the money against rent that fell due post administration and which would otherwise have been paid as an expense.

In part 3 of a series of blogs considering the position of landlords on insolvency we consider what are the consequences of taking money from a rent deposit if the tenant company is in administration?

Can a landlord be forced to accept a surrender of a lease?

By Devinder Singh and Rachael Markham on December 2, 2019 Posted in UK

In part 2 of a series of blogs we consider whether a landlord can be forced to accept a surrender of a lease and the consequences of that.

This point was recently considered in the context of a scheme of arrangements where the Court concluded that a landlord cannot be forced to accept a surrender of a lease because this affects the landlord’s proprietary rights and therefore was outside of the scope of the arrangement.

Does a company voluntary arrangement permanently vary the terms of a lease?

By Devinder Singh and Rachael Markham on November 29, 2019 Posted in UK

In this three part blog we highlight three recent court decisions concerning landlord rights and insolvency, which provide cautionary warnings and surprising twists. The questions we consider are:

Does a company voluntary arrangement (“CVA”) permanently vary the terms of a lease?
Can a landlord be forced to accept a surrender of a lease?
What are the consequences of taking money from a rent deposit if the tenant company is in administration?

In part 1 we consider the first question.

When should an NOA be filed to avoid a defective appointment or subsequent court application?

By Phillipine Wiegand-Forson on November 25, 2019 Posted in UK

E-filing a notice of appointment of administrators outside of court counter opening hours can impact the validity of an administrator’s appointment.

The recent high court rulings in SJ Henderson & Company Limited and Re Triumph Furniture Limited [2019] EWHC 2742, and Re Skeggs Beef Limited [2019] EWHC 2607 (Ch) should serve as a caution that a company, the directors or a qualifying charge holder (QFCH) intending to e-file a Notice of Appointment (NOA) should always file this within court counter opening hours in order to be certain that the administrators are validly appointed.

A QFCH can file an NOA out of court hours but the prescribed steps under rule 3.20 of the Insolvency (England and Wales) rules (IR 2016) must be followed.

In terms of a Notice of Intention to Appoint Administrators (NOI) Judge Burton in SJ Henderson concluded (although her comments were obiter) that an NOI can be e-filed by either the directors, the company or a QFCH at any time.