A recent case is a cautionary reminder to qualifying floating chargeholders (and their advisers) to review the terms of all security documents before seeking to appoint an administrator. In this case, failure by junior chargeholders to obtain consent from senior chargeholders (as required under a deed of priority) prior to the appointment of administrators led to the court finding that the out-of-court appointment of administrators was invalid (as opposed to being a procedural irregularity that could be cured).
Quistclose trusts classically arise in situations where loans are made for a specific purpose. Disputes over Quistclose trusts often arise in insolvency situations. In a recent case, the High Court found that a Quistclose trust had arisen in a situation where solicitors were forwarded monies by a third party for a specific purpose.
In a recent case, Insolvency and Companies Court Judge Jones dealt another blow to qualified floating charge holders' (QFCH's) control by finding that failure to serve a notice of intention to appoint administrators by directors of a company on a QFCH does not automatically void an administration. This finding may come as a surprise given that the reason for giving notice is to enable a QFCH the opportunity to appoint its preferred choice of administrator.
The government recently published a report reviewing voluntary measures introduced in 2015 to improve the transparency of pre-pack sales in administration. The voluntary measures sought to improve creditor confidence, enabling connected person purchasers to voluntarily obtain an independent opinion from the Pre-Pack Pool that the proposed sale was the best option. The government's report notes that despite these measures, pre-packs are still a concern.
Numerous recent extensions and changes to temporary measures have been announced that affect insolvency practice and procedure. These concern the ipso facto regime for small suppliers, the Corporate Insolvency and Governance Act 2020, the temporary restrictions affecting winding-up petitions, the prohibition on forfeiture proceedings and the revised Temporary Insolvency Practice Direction.
The Finance Act 2020 recently received royal assent, confirming the anticipated but opposed intention to restore Her Majesty's Revenue and Customs (HMRC) as a secondary preferential creditor on insolvency. From 1 December 2020 HMRC's claim will sit ahead of floating charge holders and unsecured creditors, reducing the monies available for distribution to both when a corporate files for insolvency. But what does this mean for secured lenders and corporates?
The Corporate Insolvency and Governance Act 2020 recently came into force. Alongside this act, a new insolvency practice direction (IPD) came into force and provides additional information on winding-up petitions and the 'coronavirus test'. This article examines a few of the key changes contained in the IPD.