Insolvency Newsletter: December 2024
Introduction
Welcome to the end of 2024 edition of Gatehouse Chambers’ Insolvency Newsletter. Below you will find an insightful article by Mark O’Grady, and Ryan Hocking has kindly provided a round up of developments in the law as well as an insight into what we have all been up to.
We end 2024 on a high note, having recently been ranked in Chambers and Partners as a team, some new individual listings, and maintaining our Legal 500 rankings. We’d like to say a massive thank you to all of our referees and clients, without whom these successes would not be possible.
We wish you all a very merry festive period and a successful and prosperous new year!
Editor – Katrina Mather
What have we been up to?
Alaric Watson saw off an application for an injunction to restrain presentation of a winding-up petition that was based on an alleged cross-claim. ICCJ Prentis accepted that there was insufficient merit in the application for the court to preclude presentation.
Jonathan Titmuss has been busy in the High Court successfully defeating an appeal against a winding up order that involved an interesting property issue as to the appropriate measure of mesne profits for a tenant that had been unlawfully evicted from commercial premises. JT was led by Adam Rosenthal KC of Falcon Chambers.
Full judgment here.
Sarah Clarke has been advising the defendant to a potential s.127 claim and is acting for the liquidators of an insolvent derivatives trading company in a claim against its former directors based on fraudulent trading, wrongful trading and misfeasance.
Of late Charles Raffin has been, advising a litigation funder in connection with security arrangements (with an eye on insolvency scenarios); acting for a main contractor in a £multi-million dispute following the collapse of a sub-contractor (re. ownership of goods / passage of title, urgent interim relief, etc); working on various offshore disputes, including around the failure of a couple of investment Funds & a very large J&E winding up.
Lauren Godfrey has been advising on alleged breaches of a director’s disqualification undertaking in a multi-million pound claim, including the most appropriate mechanism to compromise a threat to report the breach to the Insolvency Service as part of an overall settlement of the claim.
Phillip Patterson has been drafting the defence to a breach of duty claim brought against the director of a failed property development company. He has been contesting a 2-day application to restrain presentation of a winding up petition and preparing a s423 claim going to trial in March 2025.
Aileen McErlean is back from sabbatical and getting into the swing of things. She’s been acting for a championship football club in contested bankruptcy proceedings against a sports agent, advising on a multi-million pound misfeasance claim against a former director for breach of fiduciary duty and misuse of confidential information, and advising disgruntled creditors about challenging the decisions of the administrator under Para 74 of Sch. B1.
Ryan Hocking has been dealing with a number of misfeasance claims, and finally saw the end of a case which involved the respondent to a bankruptcy petition (rather improbably) cross-examining a process server. He has also been acting for the trustee in bankruptcy of a retired international footballer, and has been advising disgruntled creditors about restructuring plans.
Katrina Mather was delighted to be ranked for insolvency in Chambers and Partners just as she is coming to the end of her parental leave period. She has been dipping her toe back in the murky waters of the insolvency world by advising on a particularly tricky bankruptcy matter and attending lots of industry events to catch up with clients.
Mark O’Grady is continuing to represent a well-known evening entertainment venue in Soho in relation to a substantial disputed sum with its landlord. The matter is laid down for a half a day before an ICC judge.
Jaysen Sharpe has returned from Seychelles to possession and sale applications, annulments and an application to challenge a trustee’s renumeration.
Rob Hammond: alongside seeking urgent relief – including in relation freezing injunctions – Rob’s year has been spent been working on various fiduciary duty and Insolvency Act claims in the Chancery Division. These have latterly involved the enforcement of various litigation-funded cases, in which Rob obtained judgment earlier this year.
Adam Smith-Roberts has been grappling with a tricky application against former administrators and advising on a section 212 claim against a shadow director.
It’s almost Christmas but Victoria Dacie-Lombardo is already thinking about the New Year and looking forward to speaking to some of our lovely clients at the Gatehouse Insolvency Conference on 29th January 2025.
Callum Reid-Hutchings published an article in Lexis’ Corporate Rescue and Insolvency Journal for the December 2024 edition, titled “Lost in transition? Making sense of EU-derived law in the insolvency realm”.
Events 2025
J2J (Junior to Junior) Insolvency Conference
29 January 2025 – 12:00pm – 5:00pm
In response to high demand, Gatehouse Chambers’ Junior Insolvency Team will be hosting a re-run of their J2J Insolvency Conference on Wednesday 29th January 2025.
The team will refresh your knowledge of some of the key principles, procedure and strategic considerations involved in corporate and personal insolvency proceedings.
The team will cover:
- Transactions at an undervalue and preference claims (Katrina Mather and Jaysen Sharpe)
- Orders for possession and sale (Michael Maris and Victoria Dacie-Lombardo)
- Misfeasance (Alice Whyte and Callum Reid-Hutchings)
- Setting aside statutory demands and injunctions to restrain winding up petitions (James Shaw and Rob Hammond)
Please register your interest using this link. We will be in touch to confirm places in due course.
If you have any questions, please email events@gatehouselaw.co.uk.
Gatehouse Chambers’ barristers and staff will be heading to the events listed below in 2025.
Do get in touch if you or some of your colleagues will be there too and would like to meet up.
FIRE Starters Global Summit: Dublin
26 – 28 February – Conrad Hotel, Dublin, Ireland
MIPIM 2025
11-14 March – Cannes
TL4 Offshore Disputes Week
25-28 March – Cayman
R3 Annual Conference
7-9 May – Malta
TL4 FIRE International Vilamoura
20-22 May – Portugal
LexisNexis Corporate Rescue and Insolvency: Case Alerter
At-a-glance cases provided by Gatehouse Chambers’ Insolvency Team, featuring:
- Fox v Brent [2024] EWHC 2179 (Ch)
- PK Investments Limited v Sebajeevan Sabaratnam and Others [2024] EWHC 2188 (Ch)
- Nillson v Cynberg [2024] EWHC 2164 (Ch)
- Manolete Partners Ltd v Freed & Others [2024] EWHC 2242 (ChD)
Read the latest CRI Case Summaries
Authored by Alaric Watson, Philipp Simon, Rob Hammond and Adam Smith-Roberts.
Legal update
Notwithstanding the rush of consultations and reviews towards the back end of 2023, there has not been a huge amount of legislative activity in the insolvency sphere in 2024. That said, the statistics on insolvencies over the last year do make interesting reading, as does a piece of independent research into IVAs commissioned by the Insolvency Service, and there have been two fairly significant cases about which there has been a lot of animated discussion.
First, statistics. There have been fewer corporate insolvencies this year than in 2023 (53.8 per 10,000 companies on the register for the year ended 31 October 2024, as against 56.5 per 10,000 for the year ended 31 October 2023. For the last quarter, there has been an evident trend of the number of corporate insolvencies falling month on month, but the overall numbers are still significantly higher than they were pre-Covid (not to mention during the pandemic itself, during periods of which statutory moratoriums all but halted corporate insolvencies). The picture is different for individual insolvencies, which have shown less change over the long term – at the time of writing the overall levels are similar to where they were pre-Covid. In the shorter term, individual insolvencies have been trending down over recent months, but they are higher than they were last year (23.4 per 10,000 adults for the year ended 31 October 2024, as against 22.3 per 10,000 for the year ended 31 October 2023). Most notably, there was a significant spike in the number of Debt Relief Orders when the £90 administration fee was removed in April.
The Economic Crime and Corporate Transparency Act received royal assent on 26 October 2023, resulting in Companies House increasing a number of fees as of May this year to take account of the increased costs of complying with the Act.
As a result of concerns frequently being raised as to the quality of the advice being received by debtors, and the quality of information being put to creditors, in relation to Individual Voluntary Arrangements, the Insolvency Service commissioned independent research to investigate the role of poor ‘take-on’ practises in terminated IVAs. The research took a sample of 310 IVAs that were both registered and terminated between 17 September 2021 and 17 September 2023. Disquietingly, 60% of those IVAs showed evidence of poor practice, and only 25% of the sample adhered to best practice. The principal concerns identified by the research included: inaccurate information and poor review of the debtor’s income and expenditure; failing to ensure that the debtor actually understood the terms of the proposal; and incorrectly disregarded other debt solutions (both by debtors and by insolvency practitioners’ staff). Interestingly, the research did not find any meaningful correlation between take-on practises and different methods of debtors being introduced to IVA providers. The Insolvency Service is mooting a number of measures to address these concerning findings, but there is nothing concrete as yet. Watch this space.
Finally, case law. There has already been a huge amount of commentary on the judgments handed down by Leech J in Wright v Chappell (‘the BHS case’) in June and August. A detailed account is outside the scope of this update, but in very broad summary Leech J held that directors of BHS were liable for misfeasance at times for which they were not liable for wrongful trading, but that the measure of loss was essentially the same on the facts as they ought to have placed the company into an insolvency process immediately. On the restructuring side, Miles J handed down judgment at the end of September sanctioning a Part 26A plan proposed by four UK entities in the Cineworld group. Probably the most interesting point in the judgment is the way in which the Court dealt with the interaction between contractual agreements explicitly dealing with the possibility of restructuring and the competing demands of the statutory regime. In essence, the applicant companies had contracted with their landlords not to compromise certain debts within a restructuring plan or CVA, which is exactly what they then did – ultimately with the Court’s approval.
By Ryan Hocking
R (on the application of Palmer) (Appellant) v. Northern Derbyshire Magistrates Court and another (Respondents) [2023] UKSC 38
On 1 November 2023, the Supreme Court handed down its decision in the case of R (on the application of Palmer) v. Northern Derbyshire Magistrates Court. In a unanimous decision, the Supreme Court held that an administrator appointed under the Insolvency Act 1986 (“IA 1986”) is not an “officer” of the company within the meaning of the phrase “any director, manager, secretary or similar officer of the body corporate”, as contained in s.194 of the Trade Union and Labour Relations (Consolidation) Act 1992 (“TULRCA”).
Article by Mark O’Grady.
Contact us
If you would like to discuss any of the topics in this newsletter, please contact a member of our Practice Management Team:
Amy McClean, Senior Practice Manager
Marc Gilby, Practice Manager
To find out more about our Insolvency Team and their work, visit the insolvency page on our website. To view a copy of our privacy statement, please click here.
This edition of the insolvency newsletter was edited by Katrina Mather. Comments or queries about this newsletter? Please get in touch with her!