In this bulletin, given the publicised increase in petition activity, we focus on void dispositions. Nikki Brastock provides a reminder of the statutory provisions, and addresses the most recent notable case in personal insolvency; Olivia Reader considers the same for corporate insolvency. We also take this opportunity to make a number of team announcements.
The increase in the number of insolvencies has been well reported recently: inflation, labour shortages, post Brexit difficulties with international shipping, increasing raw material costs, uncertainty in capital markets, rising interest rates and more recently the increasing cost of energy are all posing difficulties for business. The statistics published by The Insolvency Service for December 2022, published on 17 January (read more in the article below), reveal a sharp rise in numbers all round. Given the increased petition activity, creditors may wish to be reminded of the provisions regarding void dispositions enshrined in the Insolvency Act 1986.
Click here to read the full article.
The Chancery Division in Re Changtel Solutions UK Ltd [2022] EWHC 694 (Ch) found in favour of liquidators seeking to recover payments deemed void pursuant to s.127 Insolvency Act 1986. Considering limitation, arguments of special and exceptional circumstances, and the defence of change of position, ICC Judge Barber found no reason to justify an exception to the principle of pari passu distribution to unsecured creditors.
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The Chancery Division in Wasu, Re (also known as Edwards v Aurora Leasing Ltd) - [2021] EWHC 96 (Ch) held the defence afforded by s.284(4) Insolvency Act 1986 to claims seeking to recover, as void dispositions, sums paid by a bankrupt to a third party who received them in good faith, for value and without notice of the bankruptcy petition, was not to be construed narrowly as an exception to the principle of recovery. A payment would be made “for value” as long as its receipt was not gratuitous.
Click here to read the full article.
The well-publicised pressures to business cannot be underestimated. The latest insolvency statistics confirms the continued trend of increase in corporate insolvencies. There were 1,964 corporate insolvencies in December 2022, a 32% increase from the December 2021 and 76% increase than the pre-pandemic comparison month (December 2019). Of this, 183 were compulsory liquidations, more than three and a half times as many as in December 2021 and 8% higher than the pre-pandemic comparison month (December 2019).
This last statistic is of particular note, and arguably a key indicator of future distress and creditor appetite to aggressively pursue liquidated debts; Ashfords has certainly experienced an increase in creditor activity, in the service of statutory demands and presentation of petitions on both corporate and individuals debtors.
We would like to take this opportunity to announce the following appointments to the team:
Nikki Brastock, Senior Associate, joined at the beginning of November 2022, bringing with her extensive contentious and personal insolvency experience.
Olivia Reader, a longstanding and highly respected member of the team, has successfully qualified as a Chartered Legal Executive (FCILEX).
These appointments, and promotion of Crispin Jones in September 2022, reflects the Team’s commitment to delivering competitive pragmatic and commercial legal advice. The Team now boasts great depth, with Team members offering various specialisms.
For more information on the content in this bulletin, please contact Nikki Brastock.
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