Thursday, 30 September 2010

Open Season on IPs in the Press - Admonishing Administrators, Lashing Liquidators, Thwacking Trustees and Slapping Supervisors

The casual reader of yesterday's press may be mistaken for thinking that the the Glorious Twelfth marked the beginning of open season on Insolvency Practitioners (IPs), instead of red grouse. Both The Guardian and Private Eye (pictured) have put the boot into IPs in no uncertain terms. The Guardian critiques Mr Andrew Andronikou's remuneration for administering Portsmouth Football Club, whilst Private Eye (No.1272, at page 29) recycles Mr Justice Henderson's judgment in Mourant & Co Trustees Ltd & Anor v Sixty UK Ltd & Ors [2010] EWHC 1890 (Ch) (23 July 2010) and the criticism leveled at Mr Nick O'Reilly and Mr Peter Hollis in that judgment. Much mileage is made of the demise of Vantis plc (in administration) and the phoenix like rise of FRP Advisory, as well as Mr O'Reilly's role as past president of R3

Both stories are worth a read. The remuneration critique is particularly interesting. For two academic articles on this issue see here and here. An IP's appearance in Private Eye might start to attract the same kind of kudos that ASBOs seemed to provide their miscreant recipients. It is said that there is no such thing as bad publicity! It is perhaps time though for R3 to try to respond to the Eye. It seems of late as if IPs feature in nearly every issue of the Eye and not for the right reasons!  

Picture Credit: http://www.timemachinego.com/linkmachinego/images/private-eye-cover-1083.jpg

Insolvency Service IT upgrade nearly complete - "Enabling the Future"

The Insolvency Service (IS) have announced that their IT upgrade is nearly complete. Their old computers been replaced by some new models. In terms of the switch over the IS note:

"Change to Insolvency Service IT
7 October 2010 – 18 October 2010*

The Insolvency Service is committed to providing the best service to its customers. We have been developing a comprehensive IT led change programme (which we call “Enabling the Future”), and as part of this programme, we are pleased to announce the replacement and modernisation of our insolvency case management IT systems. This change to our IT will:

Introduce new, modern case management systems
Completely replace all legacy insolvency case systems
Introduce significant efficiency savings, to the benefit of our fee-paying customers
Enable us to continue to provide an effective, streamlined service to all our customers

In order to accomplish the change, essential work will be carried out between 7 October and 18 October 2010*. For the majority of our customers there will be no disruption to the service we provide during this period: however, some facilities will not be available, and we apologise for any inconvenience caused as a result...

Additional Information

A. I am bankrupt or have obtained a Debt Relief Order, or am the director of a company in compulsory liquidation 

As you may be aware, the online forms service will be closing from 30 November 2010. The service will be unavailable in the period from 7 October 2010 to 18 October 2010. If you submit any information through the online forms service during this period, the official receiver’s staff will ask you to provide a paper copy.

If you are bankrupt, subject to a debt relief order, or the director of a company in compulsory liquidation, the official receiver will continue to carry out his duties throughout the change. Your statutory duty to cooperate with his enquiries remains unaffected. If you have an Income Payments Agreement or Income Payments Order, you should continue to make any payments that are due.

No payments out of insolvents’ estates can be made during the period from 7 October to 18 October 2010*. This includes any dividend payments to your creditors, and any refunds.

B. I am thinking of making myself bankrupt / a creditor has petitioned for my bankruptcy / my company may be wound up

As you may be aware, the online forms service will be closing from 30 November 2010. It will be unavailable in the period from 7 October 2010 to 18 October 2010: if you submit any information online during this period, the official receiver may ask for a paper copy.

C. I am a creditor in bankruptcy, compulsory liquidation or Debt Relief Order proceedings 

It will not be possible to issue any payments from insolvents’ estates in the period between
7 October and 18 October 2010*: this includes dividend payments to creditors. Normal payment of dividends will resume thereafter.

No Debt Relief Order applications will be determined between 7 October and 18 October 2010* and therefore during this period creditors will not receive any DRO related notifications, either postal or electronic.

D. I am a member of staff at the High Court, or at a County Court with insolvency jurisdiction

The official receiver will continue to carry out his duties throughout the change, and our service to you will not be affected.

E. I am a member of staff at a bank with whom the Insolvency Service does business

Please note that no payments from insolvents’ estates will be issued in the period from
7 October to 18 October 2010*, and our account with you will show reduced activity as a result.

If you have any queries during this period, please contact the Cashiers team on 0121 698 4257.

F. I am a member of staff at HM Revenue & Customs 

The Insolvency Service’s investigation work will continue as normal throughout this period.

Electronic daily notifications of insolvency orders will not be available during the period from 7 October 2010 to 18 October 2010*. Information relating to orders made after 7 October 2010 will be forwarded to HMRC following the introduction of the new systems. If you have any queries regarding this service, please contact Dino Georgiou (telephone number 020 7291 6714; or email Dino.Georgiou@insolvency.gsi.gov.uk) or Lindsey Haselgrove (telephone number 0151 625 6971; email Lindsey.Haselgrove@insolvency.gsi.gov.uk).

G. I am an insolvency practitioner 

Please continue to send in required information and updates as normal. A reduced service will operate in some areas:

Insolvents’ estate accounts

It will not be possible to issue any payments from insolvents’ estates in the period between
7 October 2010 and 18 October 2010*: this includes dividend payments to creditors. Deposits into the Insolvency Service Account can continue to be made as usual, but will not be credited to the estate account until service has resumed.

The EAS Enquiries team will still be available to answer your calls however due to limited system access during this time the service they can offer may be reduced.

During this period, we will be unable to process any release applications however if you continue to submit these documents they will be stored on site and as soon as our systems are back up and running, we will update our records.

Following the changes the BANCS on-line system will be re-branded as ISCIS on-line.  The look and feel of the system will be different, however, the service offered will not alter.  EAS are working on an instruction document which will be issued to assist you.

If you have any queries regarding the administration of insolvents’ estate accounts, please contact Estate Accounts Enquiries on 0121 698 4268.

Individual Voluntary Arrangements

IVAs can be approved and supervisors appointed as normal. However, IVA details will not be updated in the period from 7 October 2010 to 18 October 2010*, and new IVA details will not be recorded on the register. The register will be updated once the new systems are online: please note that it may take some time for the new information to be displayed.

If you have any queries regarding the administration of the register, please contact Gary Maneffa (please call 0121 698 4102; or email Gary.Maneffa@insolvency.gsi.gov.uk).

Insolvency practitioner details

Insolvency practitioner details which change during the period from 7 October 2010 to 18 October 2010* will not be reflected on the “Find an IP” search tool on the Insolvency Service’s website. Updates will be processed once the new systems are online: please note that it may take some time for the new information to be displayed.

If you have any queries regarding the IP database, please contact Tina Littlewood (please call 0121 698 4180; or email Tina.Littlewood@insolvency.gsi.gov.uk).

Submission of Redundancy Payment Information

Submission of redundancy forms will not be affected and service will continue as normal. The new CHAMP system will be rolled out later in the year. Information regarding developments and timetable will be included in the regular RPS Mailshot issued to IPs and ERA staff.

Recognised Professional Bodies

The RPBs have been notified of this interruption to our service so they will be able to take it into account when carrying out monitoring visits and considering the actions of their practitioners.

H. I am considering obtaining a Debt Relief Order

Approved Intermediaries will continue to have access to the DRO Website and will therefore be able to complete DRO applications on behalf of clients. However, no Debt Relief Order applications may be submitted between 7 October 2010 and 18 October 2010*.

I. I am an authorised intermediary and would like information about the impact on the Debt Relief Order process

Approved Intermediaries will continue to have access to the DRO Website and will therefore be able to complete DRO applications on behalf of clients. However, no Debt Relief Order applications may be submitted between 7 October 2010 and 18 October 2010*.

J. I would like information about the Insolvency Service's Insolvency Practitioner database

Insolvency practitioner details which change during the period from 7 October 2010 to 18 October 2010* will not be reflected on the “Find an IP” search tool on the Insolvency Service’s website. Updates will be processed once the new systems are online.

If you have any queries regarding the IP database, please contact Tina Littlewood (please call 0121 698 4180; or email Tina.Littlewood@insolvency.gsi.gov.uk).

K. I would like information about the Insolvency Service's electronic Individual Insolvency Register (eIIR)

Details held on the eIIR will not be accessible during the period from 7 October 2010 and 18 October 2010*, access to details held on the eIIR will be available once the new systems are online.

If you have any queries regarding the eIIR Register, please contact  Steve.Clarke@insolvency.gsi.gov.uk (tel. 020 7291 6712).

L. I  use the London Gazette to find out about insolvency events.

Because of the non-availability of our IT systems there will be a delay in sending for publication in the Gazette the information in respect of insolvency events. No information will be sent for gazetting in the period from 7 October 2010 to 18 October 2010*, and thereafter there will be a build up of gazettes being published for the following week.  This does not affect gazettes issued by insolvency practitioners which will continue as normal."

Picture Credit: http://www.computermuseum.li/Testpage/ZX-81-Spectrum.jpg

Wednesday, 29 September 2010

Subrogation and Charges considered: Anfield (UK) Ltd v Bank of Scotland Plc & Ors [2010] EWHC 2374 (Ch) (24 September 2010)

Mrs Justice Proudman has handed down her judgment in Anfield (UK) Ltd v Bank of Scotland Plc & Ors [2010] EWHC 2374 (Ch) (24 September 2010) whilst sitting in the Royal Courts of Justice (pictured). The case concerns the remedy of subrogation as it affects the priority of charges. The charges on a property in Stepney Green in London were created following loans to Mr Siddiqui. He was a bankrupt and the owner of the property. As Mrs Justice Proudman notes in the portion of her judgment that deals with the law; "A lender who has made advances which have been used to discharge a secured debt owed to another lender may be entitled to step into the shoes of the other lender as far as the security is concerned, thereby gaining priority over intermediate lenders also holding security over the same property.
It is plain from the authorities cited and authoritatively analysed in Appleyard (and particularly the decision of the House of Lords in Banque Financière de la Cité v. Parc (Battersea) Limited [1999] 1 AC 221) that the principle underlying such subrogation is equitable in origin and is now recognised as primarily aimed at preventing unjust enrichment." In finding that the appeal failed Mrs Justice Proudman observed: "In my judgment Her Honour Judge Marshall QC came to the right decision, that the Bank is entitled to be subrogated to the Halifax Charge."

Picture Credit: http://media-2.web.britannica.com/eb-media/28/18528-004-9C2C3B23.jpg

Lehman Brothers auction - Christie's, London, 29/09/10: creditors hoping for high prices!!

The second auction of Lehman Brothers' artwork and ephemera is due to take place at Christie's in London later today. The catalogue makes interesting reading, not least because of the amount of books that are for sale. Lehman Brothers had a rather extensive corporate library as well as art collection it seems. Perhaps the bankers spent too much time reading Dickens! The BBC reported last week that the US auction made some $12,000,000 for creditors. 

There are some very interesting items in the auction, including corporate plaques (pictured) from the failed bank. We currently have, inter alia, an Investors in People plaque from Arthur Anderson, an Enron field badge and flask, and a WorldCom paperweight in the Muir Hunter Museum of Bankruptcy - this Lehman plaque could be a nice  complimentary piece. Happy bidding! 


Tuesday, 28 September 2010

Sidestepping Insolvency - Tips from the Irish Times - some dubious creditor avoidance strategies

A health warning - I am not condoning anything that follows! The Irish Times have published a fascinating article that discusses ways of avoiding the effects of insolvency or the status itself. Mr Arthur Daley (pictured) might be proud of this dodgy menu of naughtiness! Some of the 'tips' hark back to a former age when keeping house, fleeing the realm, and fraudulent conveyances were de rigueur. Fortunately for creditors a number of statutory mechanisms now exist in England and Wales, and Ireland, to preclude the behaviour suggested in the article. I am not sure if the menu was published as some form of guide to defraud creditors of their just debts, or if it is some sort of general discussion piece. Either way it seems a strange editorial decision, particularly from a creditor's point of view. The story notes: 


"...the scale of the assets of the former Anglo Irish Bank chief executive Seán FitzPatrick – from oilfields in Nigeria to investment portfolios worth millions – were revealed as his bankruptcy case was heard in court...

While insolvency practitioners emphasise that the point of bankruptcy is not to punish but to discharge people of their debts and let them continue with their lives, questions have nonetheless been raised about whether bankrupts are, or should be, left with nothing after the legal process.

Is it usually the case that they get to squirrel away enough money to keep themselves comfortable after their day out in court?

The key to survival, it seems, is to prepare for bankruptcy before the bailiffs come calling. Here are a few strategies for sidestepping insolvency.

DIVORCE 

Yes, it might seem extreme, but divorce is one potential route for those looking to protect their assets (although, in practice, its use appears to be limited in Ireland). The idea is that a seriously indebted individual divorces their spouse, thereby passing on about half their wealth to their better half.

However, any move to divorce would have to be perceived as “genuine” by the courts. And there is always the possibility that once the divorce goes ahead, and your spouse receives all your assets, he or she will no longer be in the mood to share.

BIDE YOUR TIME 

In Ireland you can choose either to be made bankrupt voluntarily or to be made bankrupt at the request of a creditor. With what are seen to be more progressive bankruptcy laws expected to be introduced by the end of the year, those in a position to choose when to go bust might look to postpone doing so until a new six-year regime is implemented (it’s currently a 12-year process in Ireland).

TRANSFER ASSETS 

One of the simplest steps taken by those fearing bankruptcy is to transfer their key assets, such as the family home or the assets of companies they own, into the ownership of their spouse.

Another option, if a property is owned together with a spouse on a tenants-in-common legal basis, is to switch it to a joint-tenants basis, as this will make it more difficult for the courts to pursue.

In the case of Seán FitzPatrick, for example, it was revealed in court that his wife, Catriona, owns half of his Anglo Irish Bank-approved retirement fund, while the family home and other property are also in joint ownership.

In order to be able to transfer assets, however, you must generally own them outright. If there is a mortgage outstanding on a property, the bank or building society must give its permission for any changes, and if your situation looks somewhat compromised it is unlikely to do so.

Moreover, you are only entitled to move your assets around if you are solvent.

Once you are declared bankrupt the courts can look to reverse any transactions you may have made in the previous five years.

LEAVE THE COUNTRY 

There is little doubt that this is a route being pursued by some individuals. Indeed, the flight of indebted property developers to more welcoming climes was criticised this week by the Minister for Finance, Brian Lenihan.

Faced with the prospect of a 12-year – or, possibly, soon to be six-year – bankruptcy process, many potential bankrupts are simply fleeing their debts and the lengthy legal entanglement that precludes them from taking on a position as a company director for its duration. By doing so, however, they are often leaving behind large parts of their wealth, in some cases departing with just enough cash to live on. Much of their property will be unsellable and will be seized by lenders following their departure.

For those fleeing, the benefit is that, while there is a common bankruptcy regime across the European Union, it doesn’t apply elsewhere. So it is more difficult for a court to have a claim over any money that is generated post-departure, while the ban on directorships may also not apply.

EVADE TAX 

Taking a quick €10,000 in cash out of a company on a regular basis, and siphoning it into an offshore account, may keep some of a debtor’s money out of the bankruptcy courts. But the penalties if caught are significant.

GO ON A HOLIDAY 

The UK is not just good for a quick shopping trip or a Premier League match. It is also an increasingly popular location for bankrupts, as it has far more lenient laws than Ireland. While those applying must show the UK courts that it is their “main centre of interest”, Irish nationals, if approved, can have bankruptcy discharged within a year under the UK system. Unsurprisingly, it is the route being chosen by many of those in financial strife."

Picture Credit: http://image.guardian.co.uk/sys-images/Arts/Arts_/site_furniture/2008/02/14/arthurdaley460.jpg

The Auric Goldfinger Bankrupt

The New Zealand Herald is reporting a very interesting bankruptcy story regarding an Auric Goldfinger (pictured) species of bankrupt who reportedly hoarded gold. The story notes that: 

"...the former psychiatrist['s]...suburban home was found to contain millions of dollars of gold and silver bullion and foreign currency on Monday.

But Dr Alan Simpson, 68, was not saying anything yesterday when the Herald on Sunday found him at his Ann St home in suburban Hamilton.

"It's a long and convoluted story," is all he would say about the $4.1m worth police found in three safes when they raided his property.

Simpson said he was gagged because the matter was sub judice. He would make a full disclosure once it had been dealt with by the courts.

An Auckland-based specialist search team made the raid under the Insolvency Cross Border Act. Staff from the New Zealand Insolvency and Trustee Service were also involved.

Simpson, who has lived in New Zealand for 17 years, was declared bankrupt in an English court last September.

He is a former London psychiatrist who was also a Lloyds name - an investor in the giant English insurance company.

Simpson is well known in Hamilton church circles and is a choir singer and church reader at Cathedral Church of St Peter's. A church spokesperson who did not wish to be named said Simpson was "gracious but a somewhat enigmatic character".

"You don't penetrate much below the smile."

The police raid came after United Kingdom-based Steven Williams, appointed trustee of his estate, was tipped off that Simpson had the gold and silver and foreign currency.

There will be a hearing in the High Court at Hamilton on Friday to determine whether the English bankruptcy order can be recognised as a foreign proceeding in New Zealand, and who owns the confiscated bullion.

Last year, the English court found Simpson owed £242,920 ($520,000) to creditors, including interests and costs.

In court documents Simpson said he had lost £1980 ($4200) gambling in the two years before his bankruptcy.

Simpson's Ann St neighbours told the Herald on Sunday he was "a polite gentleman".

All were shocked at the discovery of hidden treasure.

"It came as a surprise to us, as much as anyone else," said one man who had spoken with Simpson during the week. Simpson had apologised to him for "the kerfuffle".

The man noted civil proceedings are under way and the outcome was by no means certain. "All his money might be back in his safe in a few days."

Simpson has been retired since 1998 and stated his only income as a UK pension of £1245 and New Zealand superannuation of $15,408 a year.

His home is owned by a trust of which he is not a beneficiary.

Simpson leads a jet-set lifestyle. A neighbour told the Herald on Sunday Simpson was a huge cricket fan and escaped the damp Waikato winters to spend at least two months each year in England enjoying the summer game."

Picture Credit: http://mjmcx2too.homestead.com/files/villian03.jpg

Parliamentary Seat Insolvency Rates from R3.

R3, the Association of Business Recovery Professionals, have published some interesting data (pictured) on Parliamentary seat insolvency rates. Their press release notes:

"A new map showing levels of personal insolvency by constituency reveals that Doncaster North, new Labour leader Ed Miliband’s constituency, came sixteenth on a list of insolvency hotspots in England and Wales, according to research by insolvency trade body R3, with 369 new personal insolvencies in 2009. David Cameron’s constituency of Witney is placed at number 322 (with 215 new cases), while Nick Clegg’s constituency, Sheffield Hallam, had the fourth lowest number of new personal insolvencies - with just 95 new cases in 2009.

Torbay on the South West coast tops the list with 470 new personal insolvencies in 2009, followed by Mansfield in Derbyshire with 442 new cases and Weston-Super-Mare near Bristol in third with 424. Torbay also topped the list in 2008 with 383 cases. A decline in tourism and heavy industries are key factors in creating insolvency hotspots in the North East and South West.

The constituency with the lowest levels of personal insolvency was Wimbledon in London with 78 cases, followed by Tooting, Ealing (London) both with 83 and Sheffield Hallam Co with 95 cases. These findings come as personal insolvency reaches record levels with over 134,000 for England and Wales in 2009. R3’s President Steven Law commented:

“Over the course of the last decade, personal insolvencies have increased by 350% and our research also shows that 42% of the British population are currently finding it a struggle financially to get through the month. The map that we have launched today shows where the problem areas lie, but we would expect personal insolvencies to continue to rise right across England and Wales over the next few years.

“In the North East the decline of heavy industries and the consequently higher than average unemployment in the region goes some way to explaining the high insolvency rates. In the South West, productivity and household income are below the UK average, coupled with a reliance on the tourism sector. Public sector cuts are likely to have an impact in future across the country as businesses who rely on those contracts begin to suffer. Our insolvency map also includes advice for MPs to help those of their constituents who are facing financial problems.”
Picture Credit: R3.

Monday, 27 September 2010

Nottingham Law School’s International Insolvency Law Conference, 15 September 2010: Proceedings Summary and date for the diary for next years event: 14 September 2011

I am grateful to Professor Rebecca Parry for sending over Ms Paula Moffatts's summary of the recent International Insolvency Law Conference at Nottingham Law School (pictured). Unfortunately I could not attend the event as I was at the SLS annual conference. This was a great pity as the report from the day shows that it was absolutely top notch. The next event, which is scheduled for 14 September 2011 should be put in diaries asap! Here are the details from the 2010 event: 



"By a strange quirk of fate, Nottingham Law School’s Insolvency and Corporate Law Research Group’s annual International conference fell on the second anniversary of the insolvency of Lehman Brothers.  Professors David Burdette and Adrian Walters (who organised the conference) felt that it was, therefore, entirely fitting to invite Judge James M Peck of the US Bankruptcy Court in the Southern District of New York to deliver the keynote address.  Judge Peck has presided in the Lehman Brothers bankruptcy since it started in 2008. 

Judge Peck’s address was fascinating, giving insights into how he and his team manage the Lehman’s case and how it has changed his life, effectively becoming his career.  The statistics are astonishing: in the US, there are 24 Chapter 11 proceedings; two Chapter 15 proceedings; and 39 active adversarial proceedings.  Claims are estimated ultimately to be in the region of US$ 1 trillion and and costs are running at approximately US$ 1 billion.  

Understanding the documents and the transactions has been a key part of the litigation.  Matters have been hampered where electronic data has not always been available due to the separation of affiliated units and the use of different software across the organisation.  A number of the matters being addressed have no precedent.

To deal with the enormous workload, monthly omnibus hearings are conducted, in addition to the trials.  Clearly, the burden on the court is enormous and, where possible, cases are encouraged to go to mediation.  This approach has been used for some of the guarantee and derivatives claims.  

Judge Peck considered that one of the most important things that he had achieved so far, was to agree a cross-border protocol.  The purpose was to minimise costs and maximise recoveries by requiring maximum information sharing amongst the parties: hugely important as there are currently 80 sets of proceedings in 60 jurisdictions.  

Overall, he considered that the US Bankruptcy system has held up well in the circumstances.

************************************************

Joe Bannister (Hogan Lovells) chaired a session on international judicial co-operation in which Judge Peck and Professor Dr Heinz Vallender (Chief Judge, Cologne Bankruptcy Court) shared their experiences.

Both judges considered that, generally, judicial co-operation is brought about at the request of the insolvency practitioners bringing the proceedings.  Both parties will tend to realise that it is necessary and co-ordinate approval by bringing a request in each court.  Judge Peck considered that, in his experience, the only exception had been in the context of the Lehman’s litigation where the large number of contentious cases exposing international issues indicated that a court to court protocol was required.

Judge Vallender considered that judicial co-operation was easier to effect in common law jurisdictions than in civil ones, largely because of the language barriers involved, but also because of perceived legal limits.  In Germany, for example, there was no specific authority for co-operation.  Whilst Judge Vallender took the view that if co-operation was necessary he would co-operate, he recognised that this approach was not necessarily shared by his fellow judges who would not co-operate as this was not specifically allowed by law.  He also considered that wider cultural differences could prove a barrier to judicial co-operation.

Judge Peck gave an example of a case where he had gone beyond the protocol agreed by the parties.  This had happened where he and his fellow judge had recognised that they needed to collaborate to ensure that the proceedings ran smoothly and they had communicated by email and telephone.  These communications had not been sought by the parties to the proceedings who were unaware of them, but the judges immediately informed them after the event. 

Although Judge Peck was unable to comment on cases that are currently before him, he indicated that the current discussions between him and the High Court in the Perpetual case are on an entirely formal basis, being conducted by “snail mail” and without personal contact. 

This was a fascinating discussion from start to finish.  From what was said, it seems as though judicial co-operation on a personal basis is likely to be most effective where an element of judicial collaboration is necessary to ensure that the case is managed effectively: as an outside observer, it is harder to see how it will work when there is a point of legal principle at stake, as in the Perpetual case.  Still, they always say that judges are lonely, so if they can make friends across continents, that has to be a good thing!


************************************************

The morning’s general session was chaired by Professor Rebecca Parry (Nottingham Trent University) and began with a discussion of the impact of labour law principles on South Africa’s new corporate rescue mechanism (Professor Stefan van Eck and Tronel Joubert, University of Pretoria, Professor David Burdette) followed by a discussion of the enforceability of retention of title clauses (Francesco Dialti, Hogan Lovells, Italy).

There was then a consideration of the issues with pre-packs (Dr Peter Walton, University of Wolverhampton), particularly the apparent lack of independence of the pre-pack administrator and suspicion that unsecured creditors get a raw deal.  Graham Horne (Deputy Chief Executive of the Insolvency Service) responded to Dr Walton by outlining the policy objectives of the current insolvency regime: essentially, the regime tried to achieve the best financial outcome for creditors (wealth maximisation) combined with a desire for certainty of outcome.  The approach to the problem of pre-packs had, to date, consisted of seeking to ensure transparency (SIP 16 had been part of this drive) and that there was a system in place to catch wrong doers within the system, whether directors or insolvency practitioners.  It is not clear whether the present coalition government will take any action to change the regime as government policy is being driven by its economic outcome: i.e. things will probably only change if the change will help the deficit.

The afternoon session was chaired by Hamish Anderson (Norton Rose) and saw a brief consideration of the merits of forum shopping in both corporate and personal insolvency.  There were presentations from Professor Gerard McCormack (Leeds University), two very able PhD students Keith Crawford (Nottingham University) and Joseph Spooner (UCL) as well as Anton Smith (Geldards) and Professor Adrian Walters which gave everyone an opportunity to discuss bankruptcy brothels which was much enjoyed.  

Jennifer Marshall from Allen & Overy indicated that the panellists (Richard Sheldon QC, 3-4 South Square; Samantha Bewick, KPMG) were firmly of the view that forum shopping in corporate insolvencies was a Good Thing if it got the best result for the client.  

Chief Registrar in Bankruptcy Stephen Baister indicated that he thought that harmonisation was not necessarily the best way forward as he thought competition was important.  Professor Adrian Walters made a nice point following on from his paper, noting that the personal insolvency regime currently favoured debtors, which was somewhat contrary to the policy espoused by Graham Horne.

The final session was chaired by Neil Cooper (Zolfo Cooper) and considered IP regulation and remuneration.  Sue Aspinall summarised the Office of Fair Trading’s Market Study on Corporate Insolvency and, in response, Steven Law (President of R3) said that he broadly welcomed the report.  There was a lively debate as to whether the recommendation for a complaints body was a good idea.  Whilst it would probably improve matters for unsecured creditors, concerns were voiced that it would be costly to administer and lead to a rash of ill informed complaints, all of which would lead to a reduction in the amount of money that was ultimately available for creditors.

The discussion continued in the bar afterwards."



Picture Credit:   http://www.ntu.ac.uk/about_ntu/images/cms72903lg.jpg
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