Insolvency News And Legal Updates - June 2018

Cambridge Analytica closing its doors

 Cambridge Analytica, the data analytics firm at the centre of the Facebook data scandal, is closing its doors and commencing insolvency proceedings. The company has been unable to recover from the bad press coverage and large legal fees in dealing with the aftermath of the Facebook data breach allegations. 

Although they deny any wrongdoing, the company is no longer able to continue trading as customers and suppliers have been put off by the negative media, and it is understood that insolvency proceedings have been commenced in the USA and that the company has been put into administration in the UK. Vince Green and Mark Newman of Crowe Clark Whitehill have been appointed as joint administrators.

Ashfords' Take: The international data firm has struggled in the aftermath of the Facebook data scandal and the negative press seems to have driven all business away. The firm had no choice but to enter insolvency proceedings, but allegations are swirling that an alternative business is being set up and that the firm's operations will simply move across, so watch this space… The company has firmly denied these rumours.

More lags on LASPO

It emerged this month that further delays to the government's long-awaited report on the Legal Aid, Sentencing and Punishment of Offenders ("LASPO") Act 2012 could be expected, as the Ministry of Justice announced that the report may not be completed until 2019. Justice Secretary David Gauke implied that the deadline that had initially been imposed, summer 2018, was "ambitious" and seemingly likely to be missed, but stressed his intention to have the review completed by the end of the year. 

LASPO has been controversial throughout the legal profession for the changes it has made to conditional fee agreements and cuts made to legal aid. The insolvency profession had been exempt from these changes until April 2016, when it was brought within the jurisdiction of the act.

Ashfords' Take: Although the government had remained tight-lipped about its intentions, it had been hoped that the review might reverse the controversial decision to include the insolvency regime within LASPO. After this month's announcement, the profession will have to wait a little longer to find out, but it seems unlikely we'll see a second "carve out" for insolvency proceedings.

Recent Cases

Reynard -v- Fox [2018] EWHC 443 (Ch) 

The Facts

Mr Reynard, a bankrupt, made an claim against his Trustee, Mr Fox. Mr Reynard acted in person at all times and issued proceedings at the county court money claims centre for breach of contract and negligence, asserting that his Trustee had failed to assess potential claims properly and had incorrectly valued the claims, and therefore had failed to take action. 

Mr Reynard alleged that a contract existed between him and his Trustee under which the Trustee would pay the balance of the bankruptcy estate to Mr Reynard, after payment to the creditors and costs and expenses had been deducted. Mr Reynard claimed that it was an implied term that the Trustee would exercise reasonable care and skill; however Mr Reynard did not detail any particulars of breach. Mr Reynard also alleged that a negligence claim arose on the basis the Trustee owed him a duty of care.

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Toone v Robbins [2018] EWHC 569

This was an appeal of a decision of Chief Registrar Baister. 

Dean and Richard Robbins were directors of a company which entered Creditors Voluntary Liquidation in February 2011. Dean Robbins was the sole shareholder. It appears that the Company had somewhat basic accounting practices and did not keep detailed books and records. It transpired that, prior to entering Liquidation, the Company had paid substantial sums to the Directors in various instalments, which the Liquidators sought to recover under three separate claims. 

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