Thursday, 28 April 2011

Will the Olympics cause an upsurge in bankruptcy? Gambling and rash and hazardous speculation or unreasonable extravagance which may have materially contributed

Some commentators have called the Olympic ticket bidding process 'reverse gambling.' (e.g. the BBC). This is because applicants have apparently been bidding for more tickets than they might be able to afford. In other words, applicants are hoping that they will not get all of the tickets that they have applied for. If they do get all the tickets they have applied for they will be hugely over exposed with immediate effect. This is because applicants' accounts will be debited with the ticket costs automatically on the 22nd June 2011. Applicants will not know that these payments have occurred until the money has been taken from their accounts. This may mean that a number of Olympic ticket applicants may suffer liquidity issues as a result of the process. The applicants will also not be able to sell their tickets on until 2012. The BBC are reporting that two people have applied for £22,000 worth of tickets.

Will we see redress to the personal insolvency laws as a result of this Olympic ticket bidding process? If we do will the 'reverse gambling' nature of the process give rise to BRO or BRU culpability for gambling or even rash and hazardous speculation or unreasonable extravagance which may have materially contributed to the bankruptcy? Schedule 4A of the Insolvency Act 1986 governs Bankruptcy Restrictions Orders (BROs) and undertakings (BRUs). The grounds for making order are:

"(2) The court shall, in particular, take into account any of the following kinds of behaviour on the part of the bankrupt—
(a) failing to keep records which account for a loss of property by the bankrupt, or by a business carried on by him, where the loss occurred in the period beginning 2 years before petition and ending with the date of the application;
(b) failing to produce records of that kind on demand by the official receiver or the trustee;
(c) entering into a transaction at an undervalue;
(d) giving a preference;
(e) making an excessive pension contribution;
(f) a failure to supply goods or services which were wholly or partly paid for which gave rise to a claim provable in the bankruptcy;
(g) trading at a time before commencement of the bankruptcy when the bankrupt knew or ought to have known that he was himself to be unable to pay his debts;
(h) incurring, before commencement of the bankruptcy, a debt which the bankrupt had no reasonable expectation of being able to pay;
(i) failing to account satisfactorily to the court, the official receiver or the trustee for a loss of property or for an insufficiency of property to meet bankruptcy debts;
(j) carrying on any gambling, rash and hazardous speculation or unreasonable extravagance which may have materially contributed to or increased the extent of the bankruptcy or which took place between presentation of the petition and commencement of the bankruptcy;
(k) neglect of business affairs of a kind which may have materially contributed to or increased the extent of the bankruptcy;
(l) fraud or fraudulent breach of trust;
(m) failing to cooperate with the official receiver or the trustee."

Picture Credit:  http://www.olympics-accommodation-finder.com/files/olympic%20rings2.JPG

Insolvency Event: Insolvencies of International Financial Institutions: Issues and Possible Solutions - 2 June 2011, 18.00 - 19.30 - Slaughter & May

The British Institute of International and Comparative Law and Queen Mary, University of London, have advertised the following insolvency event: "Insolvencies of International Financial Institutions: Issues and Possible Solutions. The vent is due to take place on 2 June 2011, 18.00 - 19.30 at Slaughter and May, One Bunhill Row, London EC1Y 8YY (pictured). The speaker is H Rodgin Cohen. The advert notes that:
"Rodgin Cohen is a partner and Senior Chairman at Sullivan & Cromwell LLP, New York. He has been
involved in the leading regulatory and securities law matters on behalf of major US and non-US banking and other financial institutions and their trade associations. He is concerned about the continuing uncertainties in relation to cross-border insolvencies and will propose possible solutions."

Picture Credit: http://www.whybrow.co.uk/images/slaughter/photo1.jpg

Wednesday, 27 April 2011

Museum items from the Grand Bazaar, Istanbul - liquidation stamp on the Tramways & Electricite de Constantinople Societe Anonyme

I have recently returned from a short holiday in Istanbul. Whilst there I had in mind the recent article by Chief Registrar Baister on the country's insolvency provisions (see: Baister, S & Altynsoy, E. The bankruptcy law of the Republic of Turkey (2009) 2 CRI 67) and the ways in which Turkey dealt with individual insolvents in the past. Whilst hunting down a fez in the Grand Bazaar I came across what must now be accounted one of the Muir Hunter Museum of Bankruptcy's more obscure items. We now have added to the collection a bond certificate of the Tramways & Electricite de Constantinople Societe Anonyme (pictured). The item has been stamped with a liquidation stamp (pictured below) noting "Societe mise en Liquidation, 13 Decembre 1938."

As soon as I have undertaken more research on the company and the document I will update this post with details on the company's decline into liquidation. In the interim, one authoritative source notes; "on June 30th 1914, all parties in the Consortium of Constantinople gave their blessing to strengthen their powerful alliance in energy and public transport into a single mega-company, the Brussels based “Tramways et Electricité de Constantinople”, to be run on day to day basis by the Belgian group Sofina." Don't worry readers I also found a fez!

New BIS/IS publication - Debt Relief Orders

BIS and the Insolvency Service (IS) have published a new publication on Debt Relief Orders (DROs - pictured). See here. The document provides information on applying for a DRO and explains the procedure for those already subject to an order.  The document provides an additional text to 'How to make someone bankrupt' (URN 11/867) and 'How to petition for your own bankruptcy' (11/868), also published 21 April 2011.

Picture Credit: BIS/IS.

Tuesday, 26 April 2011

Two new objects for the Muir Hunter Museum of Bankruptcy at KLS

The Muir Hunter Museum of Bankruptcy at KLS has acquired two further interesting obejcts. The first is a signed letter written by the Earl Loreburn. A graduate of Cheltenham College and Balliol College, Oxford, Sir Robert Threshie Reid DCL, QC, KCMG, PC,  the 1st Earl Loreburn, Baron Loreburn of Dumfries (1846–1923) was called to the bar by the Inner Temple in 1871. His biographer notes that he was, "...Especially able in commercial suits, ‘he could unravel complicated details in a partnership and track a fraud through all its windings’ (The Times, 1 Dec 1923)."  Lentin continues with a vivid physical description of Reid; "A stout, bluff, good-natured man, addicted to his cup of tea and his clay pipe, with a strong physique and a large head (which critics called ‘swelled’), determined in his opinions, yet kindly and soft-spoken, he was well liked for his frank, open demeanour, his informality, and his sportsmanship. In an age when first names were less frequently used than later, he was widely known as ‘Bob’ Reid."

Loreburn took silk in 1882 aged 36. In 1894 he was knighted following his appointment as Solicitor-General. In the same year he became Attorney-General following his predecessor's elevation to the Court of Appeal. Loreburn was appointed Lord Chancellor in December 1905. He was raised to an earldom in the coronation honours of 1911. Loreburn's noteworthy insolvency opinions include:
- Chatterton v City of London Brewery Company, Limited [1915] A.C. 631
 - Hollinshead v P&H Egan Ltd [1913] A.C. 564
 - Moss Steamship Co Ltd v Whinney [1912] A.C. 254


The second item is in fact six items as it is a tracnhe of bankruptcy revenue stamps. The bankruptcy revenue stamp stamp collection grows apace! The stamps are 1921 KGV 1/6, 2/-, 2/6, 5/- 10/- & £1 - all on small pieces. One of the stamps (bottom left) is particularly noteworthy as the document upon which it is attached contains guidance to creditors on the use of stamps.

Thursday, 21 April 2011

ROT's place in administration in the Court of Appeal - Sandhu (t/a Isher Fashions UK) v Jet Star Retail Ltd & Ors [2011] EWCA Civ 459 (19 April 2011)

Does a buyer who has received goods on ROT terms cease to have authority to sell those goods once it has became insolvent and entered into administration? That, inter alia, was the question before the Court of Appeal in Sandhu (t/a Isher Fashions UK) v Jet Star Retail Ltd & Ors [2011] EWCA Civ 459 (19 April 2011). The panel in the case consisted of Lord Justices Maurice Kay (pictured), and Moore-Bick and Lady Justice Smith.  Moore-Bick, LJ gives the substantive judgment. He notes:

"Mr. Arden's case rests on two main propositions: that in relation to the buyer's authority to dispose of the goods before it has paid for them, the effect of the retention of title clause is broadly the same as that of an agreement for a floating charge; and that in the case of a floating charge the company's authority to dispose of its assets is limited to disposals made in the ordinary course of business and ceases on insolvency.

The second of those propositions was not seriously in dispute. Nowadays a debenture which creates a floating charge normally expressly permits the borrower to dispose of assets "in the ordinary course of business", but from time to time disputes have arisen over the precise meaning of that expression. In Ashborder BV v Green Gas Power Ltd [2004] EWHC 1517 (Ch), [2005] 1 BCLC 623 Etherton J. reviewed a number of authorities in which the question has been considered and in doing so drew attention to the case of Driver v Broad [1893] 1 Q.B. 744, in which Kay L.J. expressed the view that there is no distinction between a debenture which expressly gives the company liberty to dispose of the charged property "in the ordinary course of its business" and one that does not, the concept being, in his view, inherent in the term "floating security" or "floating charge." The case therefore supports the proposition that a debenture creating a floating charge limits the company's ability to dispose of its assets to disposals under transactions made in the ordinary course of its business. In paragraph 227 of his judgment Etherton J. set out certain conclusions that he thought could be drawn from the decided cases about what is meant by the ordinary course of a company's business in this context. The last of these conclusions, on which Mr. Arden placed particular reliance, was that transactions which are intended to bring to an end, or have the effect of bringing to an end, the company's business are not transactions in the ordinary course of its business. For my part I would accept that as a correct statement of the law."

Picture Credit: http://www.thomasmoreinstitute.org.uk/files/pictures/kay.jpg

New Item for the Museum: Bankruptcy Act 1883 and 1890 - Notices and Statements of Affairs



The Muir Hunter Museum of Bankruptcy at KLS has acquired four new documents which relate to a late 19th century bankruptcy case in Stockton-on-Tees, County of Durham. The four notices (which include statements of affairs- pictured) relate to Re Sanders and Sons, and in particular a Mr George Sanders and his attemtps to seek a release from his indebtendess from his creditors pursuant to the Bankruptcy Acts of 1883 (s.82) and 1890. They are dated 6th June 1892. The Trustee in Bankruptcy is a Mr Frank Brown of Finkle Chambers, Stockton-on-Tees. The Official Receiver was Mr JR Stubbs of Middlesborough. Mr Sanders, in partnership, carried on business at Prince Regent Street, Stockton-on-Tees, as a 'provision merchant and commission agent.'



Wednesday, 20 April 2011

Mr Registrar Jaques retires today from the Bankruptcy Registry at the RCJ

Hot on the heels of Mr Registrar Simmonds' recent retirement, the Bankruptcy Registry has now lost another one of it's judges to retirement. Mr Registrar Jaques retires today. Mr Registrar Jaques (68) was called to the Bar (Lincoln's Inn) in 1963. He was appointed as a Deputy Bankruptcy Registrar in 1996. Registrar Jaques was appointed a Bankruptcy Registrar on 6 April 1998 and retires from a heavy judicial workload. Amongst other things Registrar Jaques sat on the Insolvency Rules Committee from 15.03.07 until 14.03.10. Registrar Jaques also  bankrupted Koo Stark. His recent notable reported cases include: 
  • Freeburn v Hunt  [2010] C.L.Y. 1903
  • Phoenix Kapitaldienst GmbH, Re [2008] B.P.I.R. 1082
  • Maccaba v Lichtenstein [2006] B.P.I.R. 994
The Judicial Appointments Commission have advertised for a new Bankruptcy Registrar. Happy retirement Registrar Jaques! 

Picture Credit: http://upload.wikimedia.org/wikipedia/commons/0/06/Beach_view_Curacao.jpg

Insolvency Service - petition charges changes

The Insolvency Service (IS - pictured) has announced changes to the petition charges for bankruptcy petitions and winding up petitions. The costs are going up. The IS note:

"1. For petitions presented up to and including 31 May 2011 - NO CHANGES to current deposits.
2. For petitions presented on or after 1 June 2011:
a. Debtor’s deposit on a bankruptcy petition increases from £450 to £525.
b. Creditor’s deposit on a bankruptcy petition increases from £600 to £700.
c. Creditor’s deposit on a winding up petition increases from £1,000 to £1,165.
d. No changes to bankruptcy or company case administration fees.
e. No changes to the Secretary of State fee or fee bands.

The case administration fee is a fee charged by The Insolvency Service to every bankruptcy (£1,715) and winding up (£2,235) case on the making of a bankruptcy or winding up Order. The case administration fee is partly discharged by the deposit paid on the petition."

Insolvency Service Announcement - New Insolvency Rules - 2013 as a date for the diaries for new publications

The Insolvency Service (IS - pictured) have announced some new information on the new Insolvency Rules. From what follows it seems as if the new insolvency rules will come into force in 2013. The IS note:

"New Insolvency Rules
Towards the end of last year we invited views on whether or not to continue our work on a full re-write of the 1986 rules, as the final phase of work to modernise the Insolvency Rules. We asked for opinions also on an alternative option of making only necessary amendments to the existing rules.

A range of views were subsequently expressed by stakeholders, both in terms of their preferred option and in relation to several questions of detail posed, such as whether or not we should continue to prescribe forms. I am very grateful to those who submitted responses.

I am now writing to inform you that, having considered those responses, Ministers have decided that work on a full new set of rules should continue, although those rules will not now come into force before October 2013. This will take into account some concerns expressed about the introduction of the new rules so soon after the changes introduced in April 2010.

We plan to publish a full working draft of the new rules in the near future for the purpose of inviting feedback on the structure, content and detailed drafting. That will be the final open invitation stakeholders will have to help shape these new rules so I really would welcome as much feedback as you are able to provide.

You might also be aware of the work we are undertaking to review the administration expense rules, particularly in light of the impact of Mr Justice Briggs’ decision at the end of last year about the costs of complying with a Financial Support Direction issued by the Pensions Regulator. Again we are grateful for the helpful suggestions and information that stakeholders have provided. If Ministers are persuaded that legislative changes are required, I would expect those changes to be implemented well before the new rules..."

Danish insolvency and set-off: Larsen & Anor (Foreign Representatives of Atlas Bulk Shipping AS) & Anor v Navios International Inc [2011] EWHC 878 (Ch) (13 April 2011)

Mr Justice Norris has handed down his judgment in Larsen & Anor (Foreign Representatives of Atlas Bulk Shipping AS) & Anor v Navios International Inc [2011] EWHC 878 (Ch) (13 April 2011). The case makes for interesting reading, particularly for those who are interested in Foreign insolvency proceedings, as the case involves a Danish (countryside pictured) insolvency and issues on set-off. The question before the court was, "...whether, by virtue of the jurisdiction clause in the standard form FFA, a party to an FFA can exercise or acquire commercial rights that would not be available to it under the insolvency law governing the bankruptcy of the relevant party to the FFA whose bankruptcy created the relevant liabilities, or under the insolvency law of the jurisdiction in which the claims are to be enforced under the terms of the FFA. Recognising that there was a mismatch between the insolvency jurisdiction and law and the enforcement jurisdiction and law the trustees of Atlas Bulk seek to interrelate the two."

In relation to the facts of the case, Mr Justice Norris notes:

"On 17 December 2008 Atlas Bulk filed a bankruptcy petition with the Danish court under the Danish Bankruptcy Act 1997. On 18 December 2008 the Danish court made a bankruptcy order and appointed Lisa Bo Larsen and Michael Ziegler to be the company's bankruptcy trustees. The effect of the order was to commence bankruptcy proceedings. It also constituted an event of default under the ISDA 1992 Master Agreement incorporated into each of the FFAs. This meant that under the FFABA 2007 terms the FFAs became subject to automatic early termination. Upon automatic termination the gain or loss in connection with the transaction fell to be calculated according to the machinery incorporated into each of the FFAs. Doing these calculations established that Navios had made a loss of $4,230,742 on two of the Bulk FFAs, and a gain of $2,092,121 on the third. Setting the gains and losses off against one another left a balance due from Navios to Atlas Bulk in the sum of $2,138,621. Doing the calculation in relation to the Shipping FFA showed that Atlas Shipping owed Navios $1,516,994."

The learned judge goes on to say, "I agree with Counsel for Navios that this is not the occasion upon which to examine the merits of the non-mutual set-off arguments." There is however some discussion around insolvency law which is of note. For example the learned judge notes:

"Under the insolvency law of Denmark neither the non-mutual set-off argument nor the post-insolvency assignment argument could succeed. Under the Danish Bankruptcy Act 2007 only bilateral set-off is permitted; and, apart from insolvency law, the same principle is embodied in the "close-out netting" rules applicable under the Danish Securities Trading Act 2010...Under English insolvency law neither the non-mutual set-off argument nor the post-insolvency assignment argument could succeed. The law to be applied would be that deriving from British Eagle v Air France [1975] 1 WLR 758 and that contained in Rule 4.90 of the Insolvency Rules 1986 ("IR 1986"). This provides only for bilateral set-off and excludes any right of set-off in respect of claims acquired by assignment after the commencement of the winding up. But the arguments are being deployed by way of defence to proceedings brought in the English Commercial Court and there is no English insolvency."

Picture Credit: http://www.novalynx.ca/NLDenmark/photographs/Himmelbjerget_Mountain_24.jpg

Tuesday, 19 April 2011

Statutory Demands in the Court of Appeal: Macpherson v Wise [2011] EWCA Civ 399 (12 April 2011)

Lord Justice Patten has handed down his judgment in Macpherson v Wise [2011] EWCA Civ 399 (12 April 2011). The case concerns an application for permission to bring a second appeal against the Court's refusal to set aside a statutory demand dated 1st April 2010. The statutory demand related to a figure of £338,500. There is no new discussion of insolvency law in the case, but the facts make for interesting reading in relation to the use of statutory demands and the bankruptcy jurisdiction. As Patten, LJ notes at paragraph 7: "The application to set aside included various technical challenges to the statutory demand based on the way it was served but these are no longer pursued. The sole ground for the application is that the debt is disputed on substantial grounds. If this is right then the Court has power to, and will, as a matter of established practice, set aside the statutory demand leaving it to the parties to resolve that dispute in ordinary court proceedings: see Insolvency Rules r. 6.5(4)(b)." 

Picture Credit: http://news.bbc.co.uk/media/images/38134000/jpg/_38134333_wig150.jpg

Monday, 18 April 2011

Section 213(1) of the Insolvency Act 1986 and “or creditors of any other person”

Fraudulent trading can be traced to section 275 Companies Act 1929. The latest incarnation is contained in section 213(1) of the Insolvency Act 1986 (IA86). The section contains an interesting turn of phrase for consideration. The section states: 

"213  Fraudulent trading
(1)     If in the course of the winding up of a company it appears that any business of the company has been carried on with intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose, the following has effect."

It is the bold and underlined element of the above section that is of note, namely, the element which states “or creditors of any other person.” The point at issue is this - what is the point of proving that the company or individuals were trading to defraud someone else when the section is limited to applications by the liquidator to make contributions only to the company? This point arises because subsection (2) notes:

"(2)     The court, on the application of the liquidator may declare that any persons who were knowingly parties to the carrying on of the business in the manner above-mentioned are to be liable to make such contributions (if any) to the company's assets as the court thinks proper."

If the indivduals carried on a business that defrauded only those who were not its creditors then what would be the remedy?  If the company causes or conspires with others to cause a loss then the victims become creditors. It could be argued that the section is drafted so as to capture victims who are not ordinary creditors. But this raises the question - what are non-ordinary creditors?

There is very little case law on this conundrum. The secondary sources (i.e. Halsbury's Law of England, Sealy & Milman) are also quiet on the issue.  However, Totty & Moss on Insolvency may offer some help. They note at B1-37: "The paramount purpose of the section is to compensate those who have suffered the loss as a result of the fraudulent trading (Bank of India v Morris [2005] 2 B.C.L.C. 328 CA)." Perhaps this wider policy rationale can account for the inclusion of "creditors of any other person."


In Bank of India v. Morris (ibid) Lord Justice Mummery discusses the scope of civil and criminal liability for fraudulent trading from paragraph 98 onwards. He notes:


"The predecessor provisions of s.213 were s.275 of the Companies Act 1929 and s.332 of the Companies Act 1948 . Those sections combined both compensatory and penal provisions. They were naturally regarded as penal legislation and, as such, were strictly construed so as to give the person charged the benefit of the doubt: Re Maidstone Building Provisions Ltd [1971] 1 W.L.R. 1085 .


The position is different under the 1986 Act. Section 213 is not a penal provision. It only covers civil liability to pay compensation in cases where the company which traded fraudulently is being wound up. A “collective” action can be brought by the liquidator of the fraudulent company for contribution to be made to the assets of that company for the benefit of its creditors...Compensation of those who have suffered loss as a result of the fraudulent trading is the paramount purpose of the provisions imposing civil liability to contribute to the loss suffered."

Picture Credit: http://yesteryearsnews.files.wordpress.com/2009/03/cucking_stool.png

Friday, 15 April 2011

Guest Post: Professor Gerard McCormack on Suing companies in the UK that are the subject of liquidation proceedings elsewhere in the EU

I am grateful to Professor Gerard McCormack, of the University of Leeds, for providing the following guest post on the question of suing companies in the UK that are the subject of liquidation proceedings elsewhere in the EU. The ILA website is hosting a debate in their Forum Area on Gerry's ideas. See here. Here is the post:

"I must admit that I thought it was a bit of a no-no to sue a company a foreign company in the UK that was the subject of foreign main insolvency proceedings elsewhere in the EU. But the recent(ish) Gibraltar Residential Properties case says otherwise.

Okay one has the Jurisdiction and Judgments Regulation - Council Regulation (EC) No 44/2001- and where is an English exclusive jurisdiction clause in a contract between an English party and an EC party, then an English court has jurisdiction by virtue of Article 23 of the Regulation.  But the relationship with the EC Insolvency Regulation - Council Regulation (EC) 1346/2000- must be considered. Article 3 of that Regulation confers exclusive jurisdiction to open main insolvency proceedings in respect of a debtor to the EC in whose territory the centre of the debtor’s main interests is situated (Art 3).

Article 4 provides that the applicable law in respect of the proceedings is the law governing insolvency in the state where the proceedings are opened. The law of the State of opening of the insolvency proceedings determines “the assets which form part of the estate and the treatment of assets acquired by or devolving on the debtor after the opening of the insolvency proceedings”.

Article 4(2) provides that:
‘The law of the State of the opening of proceedings shall determine the conditions for the opening of those proceedings, their conduct and their closure. It shall determine in particular:
(e) the effects of insolvency proceedings on current contracts to which the debtor is party;
(f) the effects of the insolvency proceedings on proceedings brought by individual creditors, with the exception of lawsuits pending ….’

In Gibraltar Residential Properties Ltd v Gibralcon [2010] EWHC 2595 a Spanish construction company Gibralcon became the subject of insolvency proceedings in Spain and sought to restrain the employer, GRPL, from continuing with English legal proceedings arising out of the construction contract.  The contract contained an English exclusive jurisdiction clause but it seems that the English court proceedings were commenced only after the Spanish insolvency proceedings had been opened.  At first blush, it would appear that Spanish law as the law of the State that opened the insolvency proceedings should pursuant to Article 4(2)(f) determine the effects of the proceedings on actions brought by “individual creditors” and the exception in the provision for “lawsuits pending” would not apply. But Edwards-Stuart J founded his decision largely on Article 23 of the Judgments Regulation which gave binding effect to a jurisdiction clause in a standard “civil or commercial” contract like the construction agreement was in this case.   He said the fact that a defendant in commercial proceedings is the subject of insolvency proceedings in another Member State was not of itself a ground for depriving the Jurisdiction and Judgments Regulation of application.

Edwards-Stuart J added however that the English court would not take “any step to prejudice or interfere with the Spanish insolvency proceedings. This court will do no more than determine the rights of the parties under this contract, disputes which are subject to the exclusive jurisdiction of the courts of England and Wales, and make declarations accordingly, and, in particular, determine so far as it can which party is owed money by the other and how much (se para 15).

Nevertheless, it may be that the decision wrongly deprives the Insolvency Regulation of much of its force.  While there are oddities of language in the Regulation it seems clearly that its objective was to put the court of an EC State that opens main insolvency proceedings in the primary position of determining the effect of those proceedings on the debtor’s legal relationships.  That court is in the prime position of surveying the debtor’s debts and legal relationships and how they should be assessed and adjusted in the new situation of insolvency. Once insolvency proceedings kick in, that court should take centre stage. The Gibralcon decision compromises the unity and universality of insolvency proceedings that the Insolvency Regulation is ostensibly designed to achieve.

Or at least that is one view.  Others may have different views.  Or I may have got the facts of the case wrong and of course decisions turn on facts."

Picture Credit: http://www.map-of-europe.us/images/map-of-europe.gif

Insolvency news abounds in the press - Gazza, rubies, Toni Braxton, and more!

There has been a recent glut of insolvency related news in the press. We have to start with the fabled Wrekin ruby (pictured - the watch in the picture is probably worth more if it is on an IP!). The BBC is [belatedly] reporting that the ruby has been sold for a mere £8,000. This is somewhat short of the £11,000,000 valuation that caused Wrekin Construction's creditors' eyes to swell. This is old news though! Come on Aunty pull your finger out! At least the video accompanying the piece is of note. Elsewhere, Porsche dealers and watch sellers located around PWC's offices have very wide eyes as news reaches them that PWC have charged fees of £322 million, according to the Guardian. Whilst the figure may seem fantastic, one has to keep in mind the complexity of the work and the amount of realisations. The Guardian is also reporting that there is a rise in distressed companies. Fortunately for these companies The Grocer is reporting that CVAs are enjoying an upsurge in use. For an excellent recent piece of empirical work on CVAs see Professor Walters and Dr Frisby's work here. If all of the above is not enough, do check out Toni Braxton's explanation of how bankruptcy has affected her state side. Finally, Gazza's bankruptcy petition has been adjourned.He apparently owes HMRC £32,000.

Picture Credit: http://www.shropshirestar.com/wp-content/uploads/2010/02/Wrekin-ruby1.jpg

Thursday, 14 April 2011

Guest Post: Dr Paul Omar - Insol-Europe Academic Forum News

I am grateful to Dr Paul Omar of Sussex University Law School for the following guest post, which details recent and forthcoming INSOL Academic Forum events, deadlines, book competitions, and other interesting material: 

"A - Past Events

1. Milan Conference 31 March-1 April 2011

The Academic Forum’s Fourth Joint Conference took place on 31 March-1 April 2011 in the surroundings of the University of Milan, Italy. The conference was a collaboration with the Milan Law School, where Professor Stefania Bariatti, the newly inaugurated Chair of the Academic Forum, is the Jean Monnet Chair in European Union Private International Law. It was also co-hosted by the Consiglio Nazionale dei Dottori Commercialisti e degli Experti Contabili. A full programme dealt with reform of the European Insolvency Regulation (“EIR”) as well as of national insolvency laws. The themes were motivated by the review of the EIR and the anticipated tender process in 2011 for a report into the workings of the text, which will be designed to identify the lacunae, problems and necessary amendments that could be the subject of a revised text. Furthermore, ongoing reviews of domestic substantive laws in the European Union and related states are taking place with contributions under this topic addressing current initiatives in developed countries, countries in transition, would-be accession candidates as well as their trading partners.

The national reform dimension began on 31 March with a Mediterranean flavour, containing papers by Cecilia Carrara (LUISS Rome) on “New Financing in the Context of Workouts/Restructuring Agreements under Italian Law”, Alexandra Kastrinou (Westminster) on “The Newly Introduced Insolvency Code of Greece”, Ana Filipa Conceição (Leiria) on “Reforms to Spanish Insolvency Law” as well as Catarina Serra (Minho) on “The Portuguese Classification of Insolvency: Random or Fraudulent Insolvency”. Attention then shifted towards the East with contributions from Paul Varul (Tartu) on “Trends in the Development of Insolvency Laws in Transition States: The Baltic Experience”, Anto Kasak (Tartu) on “The Reform and Regulation of Preferential Claims in Estonian Law”, Lavinia Iancu (Timisoara) on “Reforms in Romanian Law” and Tomas Richter (Prague) on the “Verification and Contesting of Creditors’ Claims: Constitutional Limits in the Czech Insolvency Code”. As at all academic conferences, proceedings on the first day ended with a social aspect with delegates attending a reception and dinner at the La Dolce Vita Restaurant on Via Bergamini near the University. The dinner speech was delivered by His Honour Judge Luciano Panzani, the President of the Turin Court and former Member of the Italian Supreme Court, on reforms to the functioning of the Italian justice system.

The domestic reform element concluded on the morning of 1 April with a final session on mostly related states material with Christian Witting (Durham) offering a paper on “Insolvent Subsidiaries”, followed by Leonie Stander (North-West University, South Africa) on “The Improved Protection of Debtors in South-Africa: the Interaction between the New National Credit Act and the Insolvency Act” and Rodrigo Rodriguez (Bern) on “The Project for Reform of Swiss Restructuring Law”. Consideration of the European reform agenda then took place over two sessions on the same day with contributions from Bob Wessels (Leiden) titled “Renewal of the EIR: Shaken or Stirred?”, Jean-Luc Vallens, a noted French magistrate and frequent speaker at INSOL-Europe conferences, on the subject of the future of the EIR, Thomas Hoffmann (Kiel) on “Consumer Insolvency Tourism and the EIR – stuck between convergence needs and the Stockholm action plan?”, Luigi Fumagalli (Milan) on “Avoidance proceedings before the Italian courts: avoiding Article 13 of the EIR”, Giorgio Corno, a prominent Milan lawyer, on “The EIR and Italian Rules governing the Lodging, Verification and Admission of Claims: Theory and Practice”, Alexander Schall (Hamburg) on “Article 13 and the Equitable Subordination of Shareholder Loans” and ending with Melissa Vanmeenen and Arie van Hoe (Antwerp) on “Shareholder Loans at the Crossroads between Corporate and Insolvency Law”. Also on 1 April, as at previous conferences in Stockholm and Vienna, a session featuring young academics took place with presentations by Bo Xie (Manchester) on “Developments in United Kingdom Insolvency Law: Regulating Pre-packs: A Completed Agenda?”, Anthon Verweij (Leiden) on the “Kosovo Insolvency Capacity Building Project” and Luigi Lai (Warsaw) on “The New Polish Consumer Insolvency Law”.

Overall, delegate numbers approached 80 with representatives from some 17 jurisdictions. A full write-up of the conference will be contained in the summer edition of Eurofenix, the house magazine of INSOL-Europe.

B – Future Events

The Academic Forum will be organising two conferences in late 2011, both displaying a common theme, taking place on islands noted for their scenery and history. The Annual Conference of the Academic Forum will precede INSOL-Europe’s Main Conference in Venice in September, while the Fifth Joint Insolvency Conference will be held in St Helier on the island of Jersey in October.

1. Venice Conference 21-22 September 2011

The Academic Forum’s annual conference will take place on the Wednesday and Thursday (21-22 September 2011) prior to the main conference. The sessions group together a number of topics featured in the Call for Papers, including the relationship of the European Insolvency Regulation to the UNCITRAL Model Law. Under this heading, the conference will hear papers from Gerry McCormack (Leeds) on the interaction between the texts, while Daniel Austin (Northeastern University Boston) will talk on Chapter 15 and cross-border insolvencies. Joining them will be Irit-Ronen-Mevorach (Nottingham) on the prospect of substantive harmonisation of insolvency laws in Europe in the wake of UNCITRAL's work on groups and directors duties and André Berends (Ministry of Justice, The Netherlands) on a topic to be advised. Cross-border regimes outside the EIR also receive a mention in proceedings with papers from Jessica Schmidt (Jena), Marie-Louise Lennarts (Utrecht) and Paul Omar (Sussex) on recent developments in German, Dutch and United Kingdom law respectively. The third substantive topic for discussion will be substantive harmonisation or convergence in Europe, with papers from Juanitta Calitz (Johannesburg) on a European perspective on sovereign insolvency law, Ron Harmer (University College London), assessing the insolvency regimes among EBRD client states, Alexander Schall (Hamburg) on the actio Pauliana, Roman Tomasic (Durham) on the issue of forum shopping versus harmonisation and Michael Schillig (King’s College London) on the contractualization of corporate insolvency law in Europe.

Continuing the tradition begun in Stockholm in 2009, an expanded Young Academics Network session this year will see contributions by five doctoral candidates, including Djuro Djuric (Saarland) on the relationship of Serbian insolvency law to European Union standardisation in insolvency, Ekaterini Sabatakakis (Littoral Côte d'Opale) on workers’ rights in insolvency, Bolanle Adebola (UCL) on receivership in Nigeria as well as Olga Lvova (Moscow Lomonosov) and Luigi Lai (Warsaw) on topics to be advised. As part of proceedings, there will be a report back on Academic Forum activities in 2010-2011 and a management board meeting to plan activities and identify themes for the Nottingham and Brussels conferences in 2012. Delegates will also attend a dinner on 21 September. Closing the conference will be the annual Edwin Coe Lecture. The Academic Forum is particularly pleased to announce that the 2011 lecture will be delivered by Professor Karsten Schmidt, President of the Bucerius Law School, Hamburg, Germany, on the interaction of insolvency law and corporate law with an especial focus on the German experience and the international background.

Please note that the registration brochure for the Venice conference is available at: , while on-line registration for the event is also possible at: .


IMPORTANT: 31 MAY DEADLINE

Travel grants sponsored by Edwin Coe LLP are also available for those seeking to attend the Venice conference. The requisite form may be downloaded from: .


2. Jersey Conference 14 October 2011

The Academic Forum’s Fifth Joint Conference will take place on 14 October 2011 in St Helier, Jersey. This one-day conference is a collaboration with the Jersey Institute of Law, which was founded to provide a focus for academic study and professional education in Jersey and Guernsey law and to nurture the legal heritage of the Channel Islands. The law on insolvency in the Channel Islands displays both its roots in the customary law of Normandy as well as influences from civil law developments in neighbouring France and, more lately, the influence, as far as corporate liquidation is concerned, of comparable rules in the United Kingdom. As a mixed jurisdiction, the laws in Jersey and Guernsey provide a fascinating insight into the juxtaposition of rules from different legal families with both civil and common law influences. The conference coincides with the 20th anniversary of the implementation of the Désastre (Jersey) Law 1990 and the passing of the Companies (Jersey) Law 1991, between which the major insolvency frameworks for individual and corporate debtors are contained.

The conference will focus on the genesis of the current framework for désastre in Jersey with a paper given by its architect, Sir Philip Bailhache (former Bailiff of Jersey). Attention will be given to the administration of désastre by Mike Wilkins (Viscount of the Royal Court), while a paper on reform initiatives proposed by the Law Commission in Jersey to both désastre and other customary law procedures will be delivered by Marcus Pallot (Advocate, Carey Olsen). An insight will also be given into insolvency from the Guernsey perspective by Jeremy Wessels (Advocate and Partner, Mourant Ozannes) as well as into practical aspects in relation to the functioning of the law with papers on the actio Pauliana by Sinead Agnew (Secretary, Institute of Law) and on the dégrèvement procedure by Mark Harris and Eloise Layzell (Associates, Mourant Ozannes). The conference will furthermore feature contributions from a number of overseas speakers with experience of law reform projects across the world, including Neil Cooper (Partner, ZolfoCooper), Harry Rajak (Sussex) and David Burdette (Nottingham Trent), who will provide views as to considerations that might inform the process of law reform should this be undertaken.

Information on the Jersey conference is available at: and , with the brochure also containing registration information.

C - Book Projects/Conference Reports

The Academic Forum is pleased to announce that the series of Technical Papers, inaugurated in 2009, has now been joined by a further volume representing contributions at the Leiden Conference in 2010, titled: “Cross-Border Management in the Banking Sector”. The Vienna Conference papers will be edited by Paul Omar in April 2011 and will appear in time for the Venice Conference. Responsibility for editing the conference collections for Milan 2011 and subsequently has been taken up by Professor Rebecca Parry of Nottingham Trent University, author of many renowned insolvency works. It is expected that the Milan conference proceedings will also be available at the Venice Conference.

Information about the series may be viewed at: .

D – Edwin Coe Prizes for Outstanding Legal Scholarship


IMPORTANT: 31 MAY DEADLINE


Edwin Coe LLP are an eminent firm based in the United Kingdom with a specialisation in insolvency restructuring. They have agreed to sponsor the activities of the Academic Forum of INSOL Europe in 2007-2013.

As part of this sponsorship, prizes are available so as to enable the recognition of legal scholarship by academic scholars and researchers specialising in insolvency law.

The prizes will be awarded by open competition.

The rules are as follows:

1. The prizes are available for sole or jointly authored published books, but not edited collections (i.e. contributed essays from a number of authors).

2. The books entered into the competition must have been published within 24 months prior to the end of the closing date of the competition (31 May 2011).

3. The prizes will be awarded by a Jury nominated by the Management Board of the INSOL Europe Academic Forum, against whose decisions there is no appeal.

4. There will be two prizes: a first prize of €600 (Six Hundred Euro) and a second prize of €400 (Four Hundred Euro), payable to the author(s) of the successful books. If in the opinion of the Jury, no one book is sufficiently outstanding for the first prize, then two second prizes may be awarded or a second and third prize. In these cases, the prize moneys may be awarded at the Jury’s discretion.

5. The prizes are open to existing and prospective members of the Academic Forum. Persons who are not members at the time of entry to the competition will be invited to join the Academic Forum.

6. Entries are invited from the authors themselves or the publishers of the text. Entries must be accompanied by:

(a)    a statement of why the book is being entered and its merits;
(b)    proof of the date and year in which it was published;
(c)    two copies of the book.

7. Nominations and the books may be sent to the Secretary at the following address:

            Dr Paul Omar
            Sussex Law School
            Friston Building
            University of Sussex
            Falmer
            BRIGHTON BN1 9PS
            United Kingdom

8. Winners of the prizes must undertake that subsequent publicity for the book, including any mention in publicity material or on a website or in any subsequent edition of the text, will note the receipt of the Edwin Coe Prize.

E – Newsletter Appeal for Information

If recipients of this newsletter wish to advertise conferences, workshops or other insolvency-connected events as well as note research projects and possible collaborations, either in future editions of the newsletter or on the INSOL-Europe Academic Forum website, please contact the Secretary at: , or ."

Picture Credit: http://www.lawinstitute.ac.je/img/Paul%20Omar.JPG

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