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Insolvency – News and Legal Updates, January 2021

Recently we have seen a number of instructions and enquiries relating to dissolved companies, property and assets vested bona vacantia, and company restorations. Generally, restoration by Court order is possible within 6 years of dissolution if the grounds for restoration are met. Administrative restoration is more limited. The process typically takes around 8 weeks at its quickest but can take much longer depending on the Court, the cooperation of third parties such as the Treasury Solicitor, Duchies of Cornwall and Lancaster, and Companies House. We are happy to assist with these processes if needed.

Two recent decisions have also focused on these issues. In their articles below, Legal Directors Katie Farmer and Crispin Jones discuss

Fakhry v Pagden (Re Core VCT) and Mistral Asset Finance Ltd v Registrar of Companies (Re Buzzlines Coaches)

Fakhry v Pagden & Anor – the wider question of self-interest
Given the insolvency regime’s focus on creditor interests and that distributions to members in that context are limited, judicial analysis of shareholders' interests in insolvency processes are rare. However, the Court of Appeal decision in Fakhry v Pagden & Anor [2020] EWCA Civ 1207 (Re Core VCT) has shed light not only on the correct way to restore a company (formerly in liquidation), but also the interaction between corporate governance, majority shareholder principles and insolvency processes where shareholders have economic and statutory interests.

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Buzzlines Coaches - Bona vacantia vesting, disclaimer by the Crown, and restoration

It is occasionally the case that a company which has been dissolved will have an asset remaining, which automatically vests in the Crown bona vacantia. This can arise however the dissolution occurred, whether:
(i) Voluntary strike-off by application of the directors or members;
(ii) Compulsory strike-off initiated by the Registrar of Companies for failure to comply with filing obligations; or
(iii) at the conclusion of an insolvency process such as liquidation or administration.

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News Updates

Reminder - Brexit and recognition of insolvency proceedings

As of 31 December 2020, the automatic recognition of UK insolvency proceedings in the EU under the EU Recast Regulation on Insolvency no longer applies to UK proceedings and appointment documentation in new insolvency cases will need to be amended accordingly. The UNCITRAL Model Law on Cross-Border Insolvency will continue to apply for those jurisdictions which have adopted it. More on this to follow in our next Cross Border Bulletin.


Carillion director disqualification proceedings

Following extensive investigations, director disqualification proceedings have been brought against eight directors of the construction company. Carillion collapsed into liquidation in 2018 with debts of £1.5 billion, resulting in thousands of job losses, hundreds of creditors losing out, and the substantial costs of the compulsory liquidation effectively being underwritten by the taxpayer through the Insolvency Service. The disqualification proceedings were issued on 12 January 2021 by the Secretary of State after the new business secretary, Kwasi Kwarteng, decided it would be in the public interest.

 

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