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Insolvency Insights - Edition 3
7th November 2023
Welcome back to this quarter's edition of Insolvency Insights.
In this edition, Lauren Hartigan-Pritchard shares her article on Creditor Duty, written for the London Gazette. Suky Mann also shares case studies on two particularly challenging director disqualification investigations she successfully defended. We round up this edition with details on where the team will be in the coming months for anyone who wants to catch up.
Creditor duty: what directors need to know
Lauren Hartigan-Pritchard discusses the recent case of Hunt v Singh [2023] EWHC 1784 (Ch), noting the considerations directors ought to have about the duties owed to creditors.
"As directors navigate challenging financial landscapes, understanding the creditor's duty is crucial as it can inform the director's decision-making process and significantly reduce personal liability in the event of company insolvency."
To continue reading the full article, follow the link below:
https://www.thegazette.co.uk/all-notices/content/104195
Suky Mann defends director disqualification involving two bounce-back loans.
Our specialist director disqualification lawyer, Suky Mann, secured a fantastic result for a director facing director disqualification investigations after he had obtained two Government bounce-back loans for the same company.
To read the full article, follow the link below:
Higgs LLP assist Deltron Lifts Limited with the acquisition of Dolphin Lifts (Midlands) Limited
We advised on the acquisition of Dolphin Lifts Midlands after stairlift retailer falls into administration.
Our team was delighted to assist with the purchase of Dolphin Lifts Midlands Limited, which was acquired by Birmingham-based clients Deltron Lifts.
The company fell into administration in August, with FRP Advisory's Benjamin Jones and Rajnesh Mittal appointed as joint administrators.
The acquisition has seen the preservation of jobs and the services offered within the West Midlands.
Deltron provides a wide range of services, including maintenance and repair of all types and makes of passenger and goods lifts; refurbishment, installation, testing and commission of new lifts to include modernisation and refurbishment.
The Birmingham-based firm provides services across Central England, London and the South Coat. Its acquisition of Dolphin Lifts Midlands follows its takeover of specialist mobility aids retailer Snowdrop Independent Living in March 2023.
Lauren Hartigan-Pritchard, Head of Restructuring & Insolvency comments:
“it was a pleasure to work with Lukas and his team on this, and we hope that this ensures the long-term success of Deltron across the UK.”
Compensation order made against director for negligent conduct
In this article, we consider the recent case of Secretary of State for Business and Trade v Barnsby (Re Pure Zanzibar Ltd) [2023] EWHC 2284 (Ch), in which a compensation order was made against the sole director of Pure Zanzibar Limited, Mr Barnsby.
The case of Pure Zanzibar Limited is only the second case concerning compensation orders since they were introduced in 2015, and, usefully, it provides clarity that they can be a tool used by the Insolvency Service in cases of negligent conduct by a director.
To read the full article, follow the link below:
Events
R&I Team take on the Fourth Samurai
The team recently enjoyed a fantastic team building day. Kindly hosted by Kings Chambers the day kicked off with an insightful and engaging training session led by Lauren Hartigan-Pritchard on the possible pitfalls in transactional insolvency matters.
During the afternoon the team headed over to Birmingham Escape Rooms where they got to try out their skills as samurai warriors, defeating the evil warlord Tanaka Masamune; the team used their combined skills to beat the room with only 2s to spare! The day finished as all good days should with great food and drink and the best of company.
Our team building day was filled with collaborative challenges, fostering trust, communication and camaraderie. Team building isn’t just about fun activities; it’s about forging unbreakable bonds, understanding our strengths, and embracing shared goals.
We came away from the day feeling united in purpose and ready to take on new challenges as a team.
Ladies Prosecco and Putt - 16 November 2023
Our Autumn Ladies Event is back for a second year running! This November we will be hosting an informal evening of networking with drinks and mini golf, and we would be delighted if you would join us. If you want to attend this event, please click here to register your interest.
Ask our Expert - Q&A
1. Can companies in financial distress pay their professional advisors, provided they are acting in the best interests of stakeholders?
Assuming that no winding-up petition has been issued, the concern of solicitors (and other advisors) in this position is that a payment made to them by a company that subsequently becomes insolvent may be clawed back by the office holder as a preference under section 239 of the Insolvency Act 1986 (IA 1986)
It will be sensible to ensure that money on account of fees is taken and applied to bills regularly and rendered before any insolvency to minimise the risk that any payment is seen as a preference. However, it is a long-established precedent that any payments made by the company to professional advisors to preserve the creditor position will be immune from challenge.
If a winding-up petition has been issued and that petition has been advertised in the London Gazette, any payments made by the company will, however, be void under section 127 of the IA 1986 unless authorised by the court.
2. Can a liquidator sell part of a piece of land and then disclaim the remaining part (once it has been given its own title number)?
The authority is at paragraph 87 of Hindcastle Ltd v Barbara Attenborough Associates Ltd and others [1997] AC 70. This specifically addresses a situation where a liquidator sought to disclaim part of the property but keep the benefit of rights attaching to that property.
A disclaimer can relate to many different types of property - intangible or contractual rights, beneficial interests, and leasehold interests; the only definite way of addressing what can be disclaimed is that it must relate to the entire interest of the insolvent party in the relevant piece of property.
In other words, the statutory provisions don't describe what can be disclaimed regarding the title type or its geographical extent.
Where you seek to divide a title first and then later disclaim the newly created title, there appears to be no reason why this could not be done as a matter of the law relating to the disclaimer. The disclaimer in that case would relate to the whole of the newly created title. The power of disclaimer survives any earlier exercise of ownership powers by the liquidator/trustee in bankruptcy, and so there is no requirement that the disclaimer can only be exercised in relation to property in the state it existed at the start of the insolvency process.
Get in touch
If you have any specific insolvency queries that you would like us to feature in the next edition, please submit your entries to: chloe.shilton@higgsllp.co.uk
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
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