
Some news and views from UK academia and practice on the law, policy and practice of insolvency
Friday, 31 July 2009
Insolvency Service - Annual Report and Accounts 2008/09 released

Project for Modernisation of the Insolvency Rules - Update

The Insolvency Service has issued the following statement on the Insolvency Rules modernisation process:
"Following the introduction of the new modernised insolvency advertising regime on 6 April 2009, The Insolvency Service is proceeding with the preparation and delivery of the remaining modernisation changes identified for the Insolvency Rules which are planned to come into force on 6 April 2010. Thereafter, all amendments to the Insolvency Rules will be taken into a new set of Rules which are planned to come into force on 6 April 2011.
The further modernisation proposals planned for April 2010 are subject to the successful passage of a Legislative Reform Order (LRO) that is currently going through the Parliamentary process. This will make necessary changes to the Insolvency Act to allow the Rules to provide for matters such as e-delivery of insolvency notices and the use of websites for sending reports and other documents to creditors.
We have recently sent a draft of the modernisation changes proposed for April 2010 to the Insolvency Rules Committee, who are required to be consulted on amendments to the Rules before they are laid before Parliament. The expectation is that they will have completed that consideration and signed off the amendments by the end of November 2009 to enable the Rules to be made early in the New Year, a few months before they are planned to come into force on 6 April 2010.
Policy officials are keen to help the insolvency profession and other stakeholders prepare for what will be a substantial raft of changes coming into force in April 2010. With this in mind, The Insolvency Service is preparing a version of the current Insolvency Rules as if they had been amended by the proposed amendments planned for April 2010. This is expected to be published on The Insolvency Service’s website by early September 2009 and will contain tracked changes highlighting the amendments. To the extent that it has been possible, this document will reflect those suggestions that stakeholders have made to our earlier consultations. Given the timeframe for delivery of the Rules amendments, the version that will be published should not be seen as a further consultation but as an aid to planning for the modernisation changes.
To provide further assistance to stakeholders, The Insolvency Service is planning to hold a stakeholder conference at 21 Bloomsbury Street, London during the afternoon of Wednesday 14 October 2009 to discuss and explain the nature of the principle modernisation changes proposed for April 2010. Invitations will be sent out over the next month and numbers will be restricted. However, should any practitioners or interested persons wish to be added to the invitation list please feel free to contact us at the address below.
Any enquiries regarding the above should be directed towards Neil Ogilvie, Policy Unit, Zone B, 3rd Floor, 21 Bloomsbury Street, London WC1B 3QW; e-mail Neil.Ogilvie@insolvency.gsi.gov.uk"
Picture Credit: http://www.insolvency.gov.uk/
Thursday, 30 July 2009
HOBS - Bankruptcy and Cricket

"At last Sir Horace took the field,A batter of great might,Moved like a lion, he a whilePut Surrey in a fright.(Haygarth, 1.10)"
Wednesday, 29 July 2009
Insolvency Reform Secretariats - R3 and Commander Trevor Traylor, MBE, C de G (Secretary)

"I had the privilege of working with him not only on the main Cork Report but also on the earlier reports on harmonisation with European laws. He had, I think, been for some years in the Official Receiver service and brought wide experience to the task, not only of providing secretarial services to both committees, but also organising research and assembling of material. He was especially keen that the main Cork Report should be written in a clear and attractive English style; it is not generally known that we had the benefit of a language specialist who read the final drafts to ensure simplicity of language. Trevor's overall contribution to insolvency law reform deserves to be remembered an honoured."
"TITLE Insolvency All-Party Parliamentary Group
PURPOSE To provide a forum for high-level discussion between Parliament and key stakeholders in the insolvency industry; and to act as a resource for Parliamentarians to learn more about major
issues relating to personal and business financial failure, recovery and prevention (including
turnaround and restructuring activity for companies and businesses).
...
BENEFITS RECEIVED BY GROUP FROM SOURCES OUTSIDE PARLIAMENT
R3, the Association of Business Recovery Professionals, provides administrative assistance (information about the group; help with organising events).
...
DATE OF GROUP’S LAST REGISTERED ANNUAL GENERAL MEETING
30 March 2009
..."
Tuesday, 28 July 2009
Bankruptcy on the increase in Northern Ireland - 1,000 a possible target

"More than 1,000 people could be declared bankrupt this year - the highest ever figure recorded in Northern Ireland.New figures from debt monitor Stubbs Gazette show that personal bankruptcies rose to 572 for the first half of 2009.
That is 55 more people than for the same period last year.
Laura Byrne, business development manager for Stubbs Gazette, said the level of desperation was evident in Northern Ireland.
"We're on pace to exceed 1,000 bankruptcies this year, the highest number ever recorded in NI's history," she said.
Ms Byrne said debt-laden consumer and small businesses saw bankruptcy [?? as in sole traders and partnerships?] as the only way out of personal debt crisis in the recession."
HOBS - Fleeing creditors in a dandy manner - George "Beau" Brummell (1778-1840)

Monday, 27 July 2009
House of Lords panels announced for Spirerose and Stone Rolls Limited

Whilst not strictly "insolvency" cases per se, two cases that are shortly to appear before the House of Lords are of note as they involve IP officeholders and litigation brought by or involving those IPs. The cases are therefore noteworthy because they involve the conduct of litigation by IPs, a subject which has recently appeared on this blog. The panels for both cases have now been announced.
In Moore Stephens (a firm) (Respondents) v Stone Rolls Limited (in liquidation) (Appellants), the panel will be:
- Lord Phillips of Worth Matravers
- Lord Scott of Foscote
- Lord Walker of Gestingthorpe
- Lord Brown of Eaton-under-Heywood
- Lord Mance
In Transport for London (London Underground Limited) (Appellants) v Spirerose Limited (in administration) (Respondents), the panel will be:
- Lord Scott of Foscote
- Lord Walker of Gestingthorpe
- Lord Mance
- Lord Neuberger of Abbotsbury
- Lord Collins of Mapesbury
Picture Credit; http://www.parliament.uk/images/upload/44061.jpg
Octagon Assets Ltd v Remblance and Another - 27 July 2009, The Times

The Times has published the Court of Appeal's (Lord Justices Ward, Mummery and Dyson) judgment in Octagon Assets Ltd v Remblance and Another. Here is the substance of the judgment:
"Where rent arrears were sought from both a corporate tenant and a guarantor it was ostensibly unjust to decline to set aside a statutory demand obtained against the guarantor mrerly because he could afford to pay the debt; if a statutory demand would not be sustained against the principal debtor it was also unjust to treat the guarantor differently.
The Court of Appeal so held by a majority, Lord Justice Mummery dissenting, when allowing the appeal of the first defendant, John Remblance, from Mr Justice Mann, who sitting in the Chancery Division on May 23, 2008, allowed an appeal by the claimant, Octagon Assets Ltd, from an order of District Judge Pearce, in Southend on Sea County Court on March 18, 2008, setting aside a statutory demand obtained against him. Octagon sought rent arrears against both Mr Remblance and the JBR Leisure Ltd.
LORD JUSTICE DYSON said that rule 6.5(4)(d) of the Insolvency Rules (SI 1986 No 1925) granted a residual discretion normally exercised in circumstances making it unjust for a statutory demand to give rise to bankruptcy consequences.
It was difficult to conceive of circumstances where ability to pay could be the sole, or principal reason for refusing to set aside a statutory demand, as the judge had found here.
Further, to allow the claimant to proceed against the first defendant via the insolvency route if it could not so proceed against the tenant, effectively the guarantor’s alter ego, would also be unjust.
The obligations upon tenant and guarantor were co-extensive, and there were no good reasons for distinguishing between the position in this case and that which would have obtained had the tenant applied under rule 6.5(4)(a) of the 1986 Rules to set aside a statutory demand.
Lord Justice Mummery dissented and Lord Justice Ward gave a concurring judgment."
Picture Credit: http://www.realfathersforjustice.org/news/media/2/Ward.jpg
A consultation on the proposal to exempt student loans from individual voluntary arrangements - Comments by October 23, 2009.

Saturday, 25 July 2009
Bourne & 101 Ors v The Charit-Email Technology Partnership LLP [2009] EWHC 1901 (Ch)

New Event - Nottingham Law School - 16th September 2009: Insolvency and Business

"Modern corporate insolvency law increasingly emphasises the importance of rescuing struggling yet viable corporate entities or their businesses. This global trend towards a corporate rescue and turnaround culture has brought with it many new challenges – not only for insolvency practitioners and insolvency lawyers – but also for business people whose businesses face the prospect of being placed under administration or liquidation.
While the importance of applying sound business principles and strategies to corporate rescue seems to be obvious, this does not appear to be an area that is often explored. Likewise, the legal structures and frameworks within which corporate rescue and liquidations take place are not always clear to directors of companies, business advisers, accountants, auditors and the like. There would appear to be some scope for discussion and debate on aspects of business practice that relate to law, and aspects of law that relate to business and accounting practice.
The purpose of this conference is to highlight some of the issues of common interest where insolvency law and business intersect, and to debate these issues among practitioners and academics alike. The intention is for the conference to be presented as informally as possible, with presentations followed by questions and open discussion. Presentations will be made by experienced practitioners and academics, and it is proposed that at least the following topics will be covered under the wider scope of the central theme of the intersection between insolvency law and business and accounting practice:
• The valuation of businesses in corporate rescue proceedings and insolvency restructurings.
• When can the business of a distressed company still be deemed to be viable?
• The importance of financial records.
• The function and importance of statutory insolvency and corporate restructuring frameworks.
• Aspects relating to fraud risk.
• Personal liability / risk of directors.
• Business management and employment issues.
• Economic policies and their impact on insolvency law.
• The future of pre-packaged administrations.
Tea, coffee and light refreshments will be provided to delegates at registration and the end of the day. A light lunch will also be served. The final programme with a full list of speakers will be sent to delegates about two weeks before the start of the conference. The conference fee is £35 per delegate. Full details regarding payment will be forwarded prior to the conference. In order to register your interest for this event, please email the marketing team at bls.marketing@ntu.ac.uk with your name, contact number, company name, affiliation and number of delegate places required. Places are limited, so early registration is recommended to avoid disappointment.
If you are interested in presenting a paper at this conference under the general theme of the intersection between insolvency law and business, or which relates to one of the specific topics listed above, please email Professor David Burdette at david.burdette@ntu.ac.uk as soon as possible.
We sincerely hope you will be able to attend, and look forward to welcoming you to Nottingham Trent University on 16 September."
Picture Credit: http://www.tma-sa.com/images/david%20burdette%20presenting%20large.jpg
Friday, 24 July 2009
Friday Fun - Which IP has been named as a party to an action the most? - 2nd Competition

- Boyden: 7.
- Treharne: 5.
- Moriarty: 1.
- Hughes: 1.
Hampton Review published on the Insolvency Service - some "room for improvement"

"The review team found that the Insolvency Service, while broadly compliant with Hampton in some areas, has room for improvement in other key areas in order to demonstrate full compliance.
Key findings were:
· Stakeholders highly value the role played by the Service in
relation to Insolvency Practitioner (IP) regulation. In
particular, stakeholders praised the close relationship with
the Service in policy consultations.
· The Service uses risk assessment to determine periods of
re-licensing for directly authorised IPs and is beginning to
base the frequency of monitoring visits to Recognised
Professional Bodies (RPBs) on risk. However, the
existence of risk frameworks and the criteria used to
determine periods of re-licensing and frequency of visits
are not transparent to stakeholders.
· The Service’s dual role as regulator of the RPBs and direct
authoriser of individual IPs is a potential barrier to the
efficient regulation of the sector.
· Current mechanisms which require the Service to
effectively reach agreement with the RPBs on new
guidance for IPs can be cumbersome and time consuming.
· The scope of sanctions available to the Insolvency Service
to deal with poor performance of IPs which it regulates
directly is narrow and inconsistent with the range of
sanctions available to the RPBs.
· There is a lack of clarity over the objectives of the Service
in relation to IP regulation and the outcomes for which it
exists to achieve.
Additionally, the review team questions whether the scope of
the review - regulation of insolvency practitioners - fully covers
the extent of the Service's business which should follow the
principles set out by Sir Philip Hampton in his review of
regulation and enforcement in the UK. Regulation of
insolvency practitioners is the only function of the Insolvency
Service covered by the Regulators' Compliance Code, under
the Legislative and Regulatory Reform Act 2006. This
reflects the fact that the Insolvency Service's other functions
relate to the conduct of civil or criminal proceedings which are
exempt under the Act. However, the Hampton principles are
arguably intended to be relevant to all aspects of regulators'
business-facing activities which are underpinned by
legislation. In this context, the Insolvency Service has an
important role to play in relation to the regulation of business.
For example, it is responsible for a wide range of guidance to
business on insolvency and bankruptcy regulation and the
Company Investigations Branch - itself moved into the Service
following a Hampton recommendation - has wide powers
under the Companies Act in relation to investigating
complaints against businesses based on risk assessment and
which can ultimately lead to the Service taking legal action to
seek the disqualification of individuals as company directors."
This is just a snapshot of a long report. It makes essential reading for anyone engaged in the area.