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Archive for September, 2008

A “rescue” culture?

As the news becomes gloomier on the economic front, one’s mind must turn to the rules relating to insolvency and their effect upon the property world.

The modern insolvency regimes are geared to a “rescue” culture and the Enterprise Act 2002 made important changes to the law; for instance, it abolished Crown preference for debts, leaving it an unsecured creditor.  It effectively replaced the administrative receiver with the administrator which puts in place a moratorium to protect the insolvent company’s assets from its creditors.  The Act also made available a prescribed proportion of floating charge assets to unsecured creditors.

The regimes include company and individual voluntary arrangements enabling the insolvent party to come to an arrangement with its creditors in the hope of trading out of the difficulties which have befallen it.  A badly advised creditor may find that the arrangement will bind it even though it did not agree the proposed agreement and claiming unfair prejudice will raely assist.  In addition, part 26 of the Companies Act 2006, which came into effect in April 2008, enables a company to come to a compromise with its creditors including restructuring the company if facing financial difficulties.

Liquidators and trustees in bankruptcy are entitled to disclaim any onerous property vesting in the insolvent party and transactions by way of gift or at an undervalue (even in connection with private arrangements such as a divorce) can be set aside by a subsequently appointed liquidator, administrator or trustee in bankruptcy.

The law is complicated.  Do you know enough to give even the most basic advice to your client?  If not, why not speak to Hatherleigh Training?