Last month the Insolvency Working Group released its second and final report, dealing with voidable transactions and Ponzi schemes. The Group's first report was released in July 2016 and dealt with regulation of insolvency practitioners and voluntary liquidations. In the second report, the Working Group make a number of recommendations on the voidable transaction regime and regarding protection from Ponzi schemes. In relation to voidable transactions, the primary recommendations were repealing the "gave value" part of the defence available to creditors with a view to increasing the protection available to creditors, and the reducing the period of vulnerability for voidable transactions from 2 years to 6 months where the debtor company and the creditor are not related. In reaction to Ponzi schemes, the report addresses potential ways that insolvency law and the Property Law Act might better protect the interests of investors in Ponzi schemes and speed up recovery processes. The Working Group suggested that Government consider whether there may be scope to amend the Property Law Act 2007 to aid the recovery of funds for creditors after the release of the Supreme Court's decision in McIntosh v Fisk.
The Ministry of Business, Innovation and Employment sought public submissions in response to the report, which were due on 23 June 2017. With the decision in Fisk v McIntosh now released, no doubt there will be further consideration of how investors in Ponzi schemes could be further protected. Read the full Working Group report here.
We reported the attempts to save flailing listed Australian law firm Slater & Gordon in our March update. Since then it has been reported that the firm has secured extra funding to keep the business going. A recent announcement by the firm reports that the agreement will provide up to $40m of working capital and discussions continue regarding recapitalisation. However the firm has also reported that it has received notice of an impending claim by shareholders alleging misrepresentations in the firm's financial statements. This is the third such claim to emerge and will no doubt represent an unwelcome distraction from the restructuring attempts.
Meanwhile, creditors of two failed UK firms have been told to expect minimal dividends from the firms' administrations. Cost of administering the closure of Liverpool firm First Stop Legal Services Limited (trading as GT Law) have increased, as have claims from unsecured creditors, resulting in a revision of the expected divided to creditors from 12p in the pound to 6.47p in the pound. Creditors of personal injury firm Prolegal have been told to expect a dividend of just 1.9 p in the pound.
Permission has been granted to Guardians of New Zealand Superannuation Fund to appeal to the UK Supreme Court against a Court of Appeal decision that comes out of the collapse of Portuguese Bank Banco Espirito Santo and concerns the transfer of most of BES's assets to a new institution, Novo Banco. The issue on appeal relates to the jurisdiction of the UK courts to determine issues consequent upon the reorganisation.
The President of the UK Supreme Court, Lord Neuberger, recently delivered the keynote speech at the International Insolvency Institute Annual Conference in London. Lord Neuberger focused issues of cross-border insolvency and the challenges facing the courts and the insolvency profession that arise in cross-border situations. He recognised some shortcomings in the common law in adapting to increased globalisation, but affirmed the judiciary's commitment to remaining attuned to the needs and realities of the commercial world.
Read the full speech here.