Friday, 31 July 2009

Insolvency Service - Annual Report and Accounts 2008/09 released

The Stationary Office has published the Insolvency Service Annual Report and Accounts for 2008/09. It costs £19.15. It can downloaded here for free.

Picture Credit: Insolvency Service.

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

As the third Ashes Test bowls off today at Edgbaston I have been mulling on the relationship between cricket and bankruptcy. There are some connections. First, Sir Mackenzie Chalmers (1847–1927), the judge, civil servant and author, was in 1882, appointed as standing counsel to the Board of Trade. He worked on the reforming bill which became the Bankruptcy Act 1883. About this time he also wrote, inter alia, with E. Hough, The Bankruptcy Act 1883 (1884). His connection with cricket? He was a member of the Marylebone Cricket Club (MCC).

Sir Horatio Mann (1744–1814), was a politician and patron of cricket. His patronage of the game dominated his life according to his ODNB entry. He also played the game. His skills for Kent are recorded in the following lines:
"At last Sir Horace took the field,
A batter of great might,
Moved like a lion, he a while
Put Surrey in a fright.
(Haygarth, 1.10)"
Sir Horatio was a founder member of Marylebone Cricket Club. His connection to bankruptcy? His love of cricket led to his bankruptcy. His ODNB entry notes, "through his attempt to keep up with the expenditure of other cricket patrons such as the third duke of Dorset and the ninth earl of Winchilsea contributed to his eventual bankruptcy, in 1805..."

(John) Henry Iles (1871–1951), the brass-band promoter and entertainment entrepreneur, was a keen sportsman. He was an occasional member of the Gloucestershire County Cricket side in 1890–91. The ODNB reports that, "he was proud once to have bowled W. G. Grace (pictured) in a net practice." Bad investments in the British film industry in the later 1930s led to his bankruptcy in July 1938.

The final link? Your faithful correspondent plays for the third XI of Ham & Petersham Cricket Club, the finest amateur club in Surrey! Good luck England! 

Picture Credit: http://cd7.e2bn.net/e2bn/leas/c99/schools/cd7/website/images/GraceWG.jpg

Wednesday, 29 July 2009

Insolvency Reform Secretariats - R3 and Commander Trevor Traylor, MBE, C de G (Secretary)

Following communications with Ms Natascha Engel MP, and in particular her parliamentary researcher, Ms Stephanie Poulter, it has come to my attention that R3 are to provide the Secretariat function to the new All Party Parliamentary Group on Insolvency (APPGI). This fact put me in mind of Commander Trevor Traylor MBE, C de G, the Secretary to the Cork Committee (Insolvency Law and Practice, Report of the Review Committee. Cmnd 8558. HMSO, London, 1982, see also: A Revised Framework for Insolvency Law. Cmnd. 91775. London, HMSO, 1984). On Commander Traylor's role on the Cork Committee see also: Carruthers, BG & Halliday, TC. Rescuing Business: The making of Corporate Bankruptcy law in England and the United States. Clarendon Press, Oxford 1998, at page 126. In addition to his Member of the British Empire medal (MBE), Commander Traylor also held a Croix de Guerre (C de G), a French military decoration.

Professor David Graham QC has the following fond memories of Commander Traylor:
"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."
Further information on the APPGI can be seen on the Parliamentary Register of All-Party Groups (at page 376): 

"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 GROUPS LAST REGISTERED ANNUAL GENERAL MEETING

30 March 2009

..."

Picture Credit: Royal Navy Commander Insignia.

Tuesday, 28 July 2009

Bankruptcy on the increase in Northern Ireland - 1,000 a possible target

The BBC are reporting that bankruptcy is on the increase in Northern Ireland. Here are some edited highlights from the article:
"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."

Picture Credit: http://www.visitbritain.com/en/Images/Northern%20Ireland_tcm12-46757.gif

HOBS - Fleeing creditors in a dandy manner - George "Beau" Brummell (1778-1840)

Elsewhere I have written at length about bankruptcy during the Regency period (see: one, two and three). One phenomenon of the period (and indeed many others!) involved the practice of fleeing one's creditors. One of the most famous exponents of this practice was the famous George "Beau" Brummell (pictured). As a friend of the Prince of Wales (later George IV) Beau was able to guide Regency fashion with his "elegance and style." Following a quarrel with the Prince, Beau fled to France in 1816 to escape from his creditors. He died in 1840 in an asylum for the insane. 

Picture Credit: http://www.dandyism.net/wp-content/uploads/2006/11/beau-in-1815.jpg

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.

A consultation on the proposal to exempt student loans from individual voluntary arrangements (IVAs) has been launched by Northern Ireland's Department for Employment and Learning. The document seeks views on proposed legislation to exempt publicly funded student loans from IVAs. This would bring that procedure into line with bankruptcy ensuring consistency in the treatment of student loans.

Picture Credit: http://www.virginmedia.com/images/1indy-lc-lecture.jpg

Saturday, 25 July 2009

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


Picture Credit: http://www.thelawyer.com/pictures/web/images/13527_prudman.jpg

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

The Insolvency and Corporate Law Research Group (ICLRG) at Nottingham Law School, in conjunction with Nottingham Business School, have sent out an invite for a joint conference on the intersection between corporate insolvency law and business and accounting practice. The ICLRG is made up of Professor Adrian Walters, Professor David Burdette (pictured right), Professor Rebecca Parry, Dr Gary Wilson and Dean Keith Gaines. The conference will be held at Nottingham Trent University on September 16th. Here is the advertising material:

"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

As a further addition to the Shortest Judgment Competition I thought I would also run a second competition to find the Insolvency Practitioner (IP) who has been cited as a party to a case the most frequently, i.e. Canty v Boyden [2006] EWCA Civ 194; [2006] B.P.I.R. 624 or Mountney v Treharne [2002] EWCA Civ 1174, [2003] Ch. 135. I currently have PWC's Mr Pat Boyden (William Roache (“Ken Barlow”) and Chris Eubank's trustee)  at seven reported cases and KPMG's recently retired Mr Steve Treharne at five reported cases. The cases have to be reported and must have been heard in a UK court to be entered into the competition. The closing date for the competition is the 20th September 2009. IPs can enter! The prize for this competition is a free copy of Jordans Personal Insolvency: A Users Guide, 2009. 

This competition is of course different to the idea of how many times a specific IP brought cases to court, i.e. Sir Kenneth Cork with the Rolls Razor saga. A different exercise would be to examine the sorts of cases that an IP brought, i.e. Gerry Weiss as an IP would come up in the Rolls Razor saga, but not necessarily as a party to the action. 

IP Litigation League Table (this will be updated as the entries flow in).
  • Boyden: 7.
  • Treharne: 5.
  • Moriarty: 1.
  • Hughes: 1.
Picture Credit: https://ecf.flnb.uscourts.gov/graphics/seal.gif

Hampton Review published on the Insolvency Service - some "room for improvement"

The Hampton Review on the Insolvency Service (The Insolvency Service - A Hampton Implementation Review Report, BIS, July 2009) has been published by the Lord Mandelson's (pictured) BIS. First, it should be noted that the Hampton reviews are: "...a series of reviews of regulatory bodies focusing on the assessment of regulatory performance against the Hampton principles and Macrory characteristics of effective inspection and enforcement. Aims to encourage best practice and continuous improvement among regulators. It was carried out by a review team drawn from the Better Regulation Executive, the Forestry Commission and Natural England. Published 23 July 2009."

The Hampton Review of the Insolvency Service has concluded that: 
"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. 


Picture Credit: http://i.dailymail.co.uk/i/pix/2008/10/17/article-1078361-0218C348000005DC-70_468x613.jpg
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