Restructuring and Insolvency Quarterly Update

Welcome to the first edition of Insolvency Insights, a quarterly briefing note for professionals with an interest in all things Restructuring and Insolvency.

Our first edition provides an insight into our exciting new growth as a team, what we have been up to and what you, as the reader can expect to see from us later in the year. Our briefing note looks to combine technical round ups, with details of events that we be hosting throughout the year.

We hope that you enjoy this quarter’s edition, and we look forward to seeing many of you at our upcoming events.

Movers and Shakers

We are delighted to announce the arrival of Suky Mann, Principal Associate, who joined the team at the end of last year. Suky joins the team with more than 12 years of experience in contentious insolvency and director disqualification claims.

The team also welcomes Jonny Jones, who qualified as a Solicitor earlier this month and re-joins the team after working closely with Lauren during his training contract. Trainee Solicitor, Chloe Shilton, joined the team in December last year and will be completing her training contract by staying with the team until September 2023. 

Lauren Hartigan-Pritchard said: “It’s been a busy 12 months which has seen the Restructuring & Insolvency team grow in strength and number. Building a team that is able to deliver an exceptional service and meet the needs of our clients is exactly what I set out to do when I joined Higgs, so I’m delighted with our expansion. Suky is fantastic addition to the team, her expertise in defending director claims is greatly supporting the team with the increasing number of instructions from directors facing insolvency claims.  Our team is now in a really strong position and I cannot wait to see what this year has in store for us.”

Technical Round - Up

Landmark Ruling on the Insolvency Interest Paradigm - Sequana in practice

On 5 October 2022, the Supreme Court gave its long-awaited judgement in BTI 2014 LLC v. Sequana S.A [2022] UKSC 25, confirming the point at which directors must have regard to the interests of creditors pursuant to Section 172(3) of the Companies Act 2006. 

The decision affirms, for the first time, that directors must balance the interests of creditors with shareholder interests when making decisions in the best interests of the company. A welcome relief for directors, a high bar has now been set before a ‘Creditor Duty’ arises, namely the Director must know or ought to know, that the company is insolvent or bordering on insolvency.

The dismissal of the submission that the duty is invoked when there is a ‘real risk of insolvency’, arguably alleviates an unfair burden placed on directors and affirms a long-held belief that creditors, as commercial entities, lend at their own risk and benefit from protective measures that can be implemented to protect their commercial interests.

Although the decision presents some clarity on when the duty may be invoked, the test for when a company is insolvent or bordering insolvency, remains fact sensitive. It is therefore crucial that directors continue to seek advice.

Fraudulent Trading: A new avenue for Creditors?

The recent decision in Tradition Financial Services Ltd v Bilta (UK) Ltd and others [2023] EWCA Civ 112 has confirmed that the scope for liability under s.213 IA 1986 has been broadened to capture those that do not have a controlling or managerial function within the company.

Ordinarily, s.213 only caught persons who were involved with the management or control of the company. Whilst it has been highlighted in some cases that liability under s.213 may extend to those who are classed as ‘outsiders’, nothing substantive has been affirmed until now.

The decision is likely to be welcomed by Liquidators, who may now look beyond directors for recovery. The Court of Appeal confirmed that the primary purpose of s.213 is the compensation of those who have suffered loss as a result of fraudulent trading and therefore, the court are now willing to extend liability to those who participated in the fraud.

Whilst cases will continue to turn on the specific facts, comfort can be taken from the fact that liability under s.213 is not limited to those with a ‘controlling or managerial function’ within the company.

It is therefore imperative to note that individual’s can no longer hide behind their position, but instead need to consider levels of participation and intent in such cases.

News and Events

Ladies Night at Molton Brown

October was an exciting month for the team, which hosted a successful professional networking event at Molton Brown in the Bullring, Birmingham.

The event connected like-minded women within the profession, giving all an opportunity to share their experiences, whilst also enjoying fizz and canapes and the very best goodies from Molton Brown!

Given the success of the event, we will be looking to launch a similar event around the same time this year. It would be fantastic to welcome guests both new and familiar, so do please express your interest when we start to circulate event details.

Breakfast of Champions

Higgs have joined forces with a leading Chambers to host a breakfast seminar, presented by expert Barristers in the industry.

This is an exciting opportunity to gain specialist insight into current ‘hot topics’, as well as network with other industry professionals.

Spaces for this event will be limited, so keep an eye out! We will be posting our upcoming events on our social media.

Spring Curry
Wednesday 26 April 2023, 6.00 pm onwards at the Indian Tavern.

Join us for an evening of post-work unwinding and casual networking with local R&I professionals.

Please click here for more details. 

Don’t worry if you cannot attend this event as we have more exciting events planned for the year! 

Regional Law Firm of the Year

NIck Taylor, Managing Partner is thrilled and honoured to share that Higgs LLP were awarded regional Law Firm of the Year at the Birmingham Law Society Awards this month.

This recognition is a testament to the hard work, dedication, and collaborative spirit of our entire team and I am incredibly grateful to work alongside such talented and supportive people who push me to be my best every day.

We also want to express our gratitude to you - our clients and business partners. You have entrusted us with your projects and provided us with opportunities to showcase our skills.

Together, we can continue to achieve great things and make a positive impact.

Get in touch

For advice on any of the topics discussed in this update or further information about the services offered by the Team please contact the Head of Restructuring & Insolvency, Lauren Hartigan-Pritchard on: lauren.h-pritchard@higgsllp.co.uk.