Corporate Insolvency law in the UK
Below are the syllabus and topics related to the 15 multiple choice questions. There’re some brief description under each topic, as well as some example questions. be prepared to see MCQ questions under these 6 topics and make sure you are fully familiar with them. The recommended textbook is Finch & Milman, Corporate Insolvency Law 3rd.
make sure these are 100% familiar with:
Insolvency Acts 1986/1994/2000 (IA86);
Insolvency Rules 1986/2017;
Enterprise Act 2002 (EA02);
Companies Act 2006 (CA06);
Company Directors Disqualification Act 1986;
Corporate Insolvency & Governance Act 2020 (CIGA2020)
Syllabus/Topics:
• Insolvency procedures (Finch & Milman, Corporate Insolvency Law, pp. 7-27)
Different insolvency procedures: 1) Administration; 2) Company Voluntary Arrangements (CVA); 3) Part 26A Schemes and Moratoriums; 4) Liquidation
– DIP – Debtor in possession
– Part 26 CA06 Scheme of Arrangement was arguably the closest thing we had in English law up until 2020
– CIGA in 2020 introduced 2 new procedures: 1) Part 26A which is closer to Chapter 11 in terms of cross-class cram down & moratorium activity; 2) Stand Alone Moratorium
– Twilight Zone – invented by prof. Milman (from Lancaster): where company declines into insolvency; directors might be guilty of wrongful trading and susceptible to IA86 s.214
– Receivership – technically abolished by EA02, but somehow still exists arguably
– The first 2 (blue) – don’t form part of the insolvent company estate (IA86 s.436); none of the values are available for creditors: they just go
– The next two (green) – participant/stakeholders in the distribution: they largely get their money; those creditors who are sufficiently astute to protect themselves with security will get a higher distribution
– Next two (orange) – they sometimes get their money, but sometimes don’t (get full amount)
– Next two (red) – generally get nothing
Example Questions:
– Principal corporate insolvency procedures in English and Welsh law?
– General Objective behind these procedures?
– What recent and older reforms have there been to the procedures?
• Insolvency Theory(Finch & Milman Corporate Insolvency Law, Ch.2 and pp.27-28.)
The logic and limits of Bankruptcy Law: Thomas Jackson and Elizabeth Warren
– Jackson, T. The Logic and Limits of Bankruptcy Law. Harvard University Press, Cambridge, Mass, 1986.
– creditors’ bargain theory: insolvency law should be seen as a system designed to mirror the agreements one would expect creditors to arrive at were they able to negotiate such agreements ex ante from behind a Rawlsian ‘veil of ignorance.
– 1987 Chicago paper – Warren, E. Bankruptcy Policy (1987) 54 Univ.Chicago L Rev. 775.
– Pluralism/communitarianism: ‘inclusive/values’; Insolvency pluralism or stakeholder insolvency & Bankruptcy as ‘dirty, complex, elastic, interconnected.’
Example Questions:
– What is corporate insolvency law and what is it for?
– What are the principal characteristics of insolvency proceedings in England & Wales and internationally?
– Aims of a ‘good modern’ corporate insolvency law?
– Any theories of insolvency law that can help explain/justify the principles and purposes of insolvency law?
– Does communitarianism underpin rescue?
– Does English and Wales insolvency law match its underpinning policy aims and has there been a carefully thought through theory?
• Rescue Culture (Finch & Milman Corporate Insolvency Law, pp.197-242, 301-442.)
Example Questions:
– What are the characteristics of companies going into liquidation? What are these drivers of insolvency?
– Distinguish LPA receivers, debenture receivers and administrative receivers.
– What were the ideas/issues/purposes behind the original introduction of the administration procedure?
– Does CIGA 2020 bolster the ‘rescue culture’?
– Why are pre-pack administrations a problem?
• Covid 19 & insolvency (Allinson, S. The Corporate Insolvency and Governance Act 2020 and other
developments: a brave new insolvency and restructuring world? (2020) CR&I, 13(5),
pp.155-157.)
– CIGA 2020
– Ongoing issue: British Property Foundation-landlords dissatisfaction with Coronavirus Act 2020 (CVA 2020); Return of Crown Preference-Finance Act 2020, practitioner dissatisfaction, ‘rescue culture’ damaged; etc.
Example Questions:
– How can we rationalize the drivers of insolvency (pre-pandemic) and the advent of the pandemic drivers of insolvency? What’s the effect on insolvency and policy?
– Has the temporary stay on liquidation during pandemic given rise to problems?
– Do wrongful trading suspension provisions make good sense for directors?
– Is furloughing sensible in policy terms in the context of insolvency?
– What package of reforms did CIGA 2020 introduce into the realm of insolvency and what power interests, if any, were in play during the passage of the CIGA Bill?
– What do the following cases tell us about corporate rescue in the time of Covid and more generally? – Re Carluccio’s Ltd [2020] EWHC 886 (Ch); Re Debenhams Retail Ltd [2020] EWHC 921 (Ch); Re Virgin Active Holdings Ltd & Ors [2021] EWHC 814 (Ch)
• Directors & insolvency (Finch & Milman, Corporate Insolvency Law, Ch.16)
– High-profile cases: Olypia&York/Farepak/Woolworths etc.; Recent cases: BHS/Carillion/British Steel etc.
– Phoenixism-IA86 s.216
– Fraudulent & wrongful trading-IA86 s.213/214
– Other insolvency offences-IA86 s.207
– Directors’ disqualification-CDDA86 s.6
Example Questions:
– Is the public protection agenda of directors’ disqualification regime achievable?
– Critically evaluate this statement: ‘Limited liability is routinely abused and nothing in the Companies or Insolvency Acts works as a deterrent or is effective in augmenting the available estate. We may as well accept that there will always be an element of abuse. It is the size of that abuse that needs to be monitored.’
– What do the directors’ disqualification statistics teach us about the deployment of the disqualification regime and its potential effectiveness?
– Rationale underlying all the ‘directors in insolvency’ provisions (IA86 s.213, 214 & CDDA86 s.6) and cases?
– What lessons can we take from Falk, J’s judgment in The Official Receiver v Atkinson & Ors [2021] EWHC 175 (Ch)?
– Why is Re Produce Marketing Consortium Ltd (1989) 5 BCC 569, (1989) BCLC 520 an instructive case in the realm of directors and insolvency?
• Pari Passu (Finch & Milman, Corporate Insolvency Law, pp.511-575)
– Timeline & waterfall approach (mentioned above)
– Whether it could/should be replaced by a different principle?
– Not law reform but conceptualization of how it operates?
– Which, if any, debts, should be preferential?
Example Questions:
– Rationale of pari passu principle?
– Critique the reform resulting from EA02 and any potential future reforms?
– Critique the reform resulting from CIGA 2020 and any potential future reforms?
– What happened to Cork’s 10% solution? Is a better solution now found in IA86 s.176A?
– How are retention of title clauses technically possible? Who suffers as a result of them?
– Rationale behind upholding Kayford and Quistclose trusts? Whom do they benefit and at whose expense?
