• BNY Corporate Trustee Services v Eurosail UK

    - BNY Corporate Trustee Services v Eurosail UK [2011] EWCA Civ 227 - BNY Corporate Trustee Services v Eurosail & Ors [2013] UKSC 28 Play The term "insolvency" is not defined in the Insolvency Act 1986. Rather, the term is based upon two tests which are applied to determine whether a debtor is "unable to pay its debts" within the meaning of section 123 Insolvency Act 1986. Section 123 Insolvency Act 1986 contains a definition of what it means for a company to be, or to be deemed by the court to be, unable to pay its debts as they fall due. It follows from this that what is contained in section 123 Insolvency Act 1986 is what a person would have to prove to the court's satisfaction to show that a company is unable to pay its debts. Being able to show that a company is unable to pay its debts is very important, as it is a trigger, which makes it highly relevant in a range of contexts. For example: - the court can wind up a company (that means it can initiate an involuntary liquidation) if the debtor company is unable to pay its debts; and - certain statutory provisions concerning voidable transactions (that is, including certain transactions known as preferences and transactions at an undervalue) can only bite where the transaction in question took place within a specified time frame and also, where at the time of the transactions, the debtor company is, or has as a result of the transaction, become, unable to pay its debts. So, the two tests which are applied to demonstrate that a company cannot pay its debts as they fall due are called the cash-flow test and the balance sheet test. At section 123(2) Insolvency Act 1986 the balance sheet test is set out. This subsection states that "A company is deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of a company's assets is less than the amount of its liabilities, taking into account contingent and prospective liabilities." The other test for insolvency, the cash-flow test, is referred to at section 123(1)(e) Insolvency Act 1986, where it states: "A company is unable to pay its debts.... if it is proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.

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    Strategic Value Capital Solutions Master Fund LP and ors (Appellants) v AGPS Bondco Plc (Respondents) EWCA [2024]

    A case examining whether certain elements of a restructuring plan under Pt 26A Companies Act 2006 were justified and fair. Play The Court of Appeal tackles in detail some critical principles which restructuring plans under Pt 26A Companies Act 2006 are built upon. It centres upon whether one plan fairly treated all creditors, and whether it endorsed the pari passu distribution principle. The novel statutory powers of cross-class cram down are also examined and assessed on the basis of whether they are fair to all creditor classes (horizontal comparison); and whether the plan is also fair in relation to the treatment of creditors in the relative alternative scenario of liquidation (vertical comparison).

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    Khan v Singh-Sall and anor [2023] EWCA Civ 1119

    Where the court finds that a bankruptcy order should not have been made, an order of annulment is not inevitable Play This case was a second appeal, in which the Court of Appeal upheld the decisions of two lower courts. In exercising its discretion, it concluded that as a result of the bankrupt's conduct and his insolvency,  his bankruptcy should not be annulled, despite having reached the conclusion that the bankruptcy order should not have been made. This case shows that where the court finds that a bankruptcy order should not have been made, an order of annulment is not inevitable, and nor is it even the case that an annulment should only be refused in "exceptional circumstances".

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    Invest Bank PSC v El-Husseini & Ors [2023] EWCA Civ 555

    A Fascinating Case Linking Insolvency, Company and Property Laws Play The court has wide powers to prevent creditors being defrauded: transactions at an undervalue can be challenged under section 423 Insolvency Act 1986 even if the debtor is not a party to a transaction or does not have a beneficial interest in the relevant assets. Debtors therefore cannot use corporate structures to avoid their creditors. Unlike transactions at an undervalue in corporate insolvency (section 238) and bankruptcy (section 339), section 423 is not confined to the insolvency context. It has a wider application. Two issues of law were considered by the Court of Appeal in this case in relation to section 423: Whether a transfer to a third party by a company owned and controlled by a debtor can be challenged as defrauding creditors; (the Bank's appeal) and Whether there can be a transaction at an undervalue if the debtor does not have a beneficial interest in the asset which is the subject of the 'transaction' (the Respondents' appeal).