ILA President’s Column - Maturity and Agelessness

08/04/10

By the time you read this, my first President's column, the ILA will have held its AGM and Annual Conference in Chester, the latter most ably chaired by David Richards J, and members will be grappling with the amended Insolvency Rules which came into effect on 6 April 2010, just in time for the age of austerity predicted to follow the imminent General Election.

We welcome Euan Clarke of Linklaters to Council, who fills the position vacated by Ken Baird of Freshfields upon his retirement from Council.  The Association has much to thank Ken for.  His contribution to the work and leadership of the ILA has been enormously valuable, and his wisdom and energy will be missed. 

In succeeding Stephen Davies QC as President, the phrase "follow that" rings in my ears. As well as building upon the work of his own predecessors, Stephen's term as President saw many improvements to the Association's offering to its growing membership.  Among these are a completely overhauled website (for which Justin Bickle and Jeremy Bamford deserve special mention), the attraction of Law Debenture as ILA sponsors, and the Technical Committee's continued prodigious output under Rita Lowe's chairmanship.

Members, past and present, can take pride as the Association reaches 21 years since its foundation in 1989, but it is the Association's future development which is uppermost in Council's deliberations. So another initiative started under the Davies' Presidency in 2010 was the launch of the Restructuring & Insolvency Lawyers' Network, led by Ryan Beckwith and Alistair Hill, and aimed at the next generation of leaders in our practice area. Indeed, where insolvency and restructuring work was once a niche area, it has now become so mainstream in these challenging times, that, just like the Scottish engineer of the Empire, the 21st century restructuring lawyer "is everywhere".  Members can expect to hear more of RILN during the course of the coming year. 

As well as stewardship for the future, Council is also mindful of the Association's original purposes, which include the promotion of interest in insolvency law and practice.  In keeping with its mission, Council has resolved to establish the Debbie Phillips' Memorial Bursary, open to those aspiring to succeed in insolvency law who face personal adversity in order to do so.  Further details will be available upon the ILA's website in due course, and members will be urged to encourage eligible applications. The Bursary celebrates the life of Debbie Phillips, an able lawyer in her own right, who, as spouse and companion of Mark Phillips QC (the first barrister to be President of the ILA), was known to very many members of the Association, and whose presence at its conferences and other events fortified the collegiality which is one of its enduring qualities.

Looking ahead, is it too much to ask that the nature of administration is understood consistently? It has been with us since 1986, and in revised form since 2003, becoming the procedure of choice for corporate insolvencies and a fundamental part of the "rescue culture". Our conference chairman himself said as much in Trident Fashions [1], when endorsing the view that Schedule B1 and the Insolvency Rules relating to new style administrations be construed "in the light of the underlying purpose of promoting business rescues".

And yet we see the Industrial Tribunal and EAT in Oakland [2] holding that an administration was initiated with a view to the liquidation of the transferor's assets, where the secondary limb of administration (better result for creditors as a whole) was being pursued, rather than the primary limb (rescue of the company as a going concern). More recently still, administration has been described as resembling liquidation more closely than receivership [3], or that an administrator making distributions is " equivalent to a distribution by a liquidator in the course of a winding up" [4]. If those views of administration are accurate, then the view of Mummery LJ in Oakland, that the EAT's approach to the construction of reg. 8 of TUPE may have been wrong, may not be quite so clear cut. We may get to find out whether TUPE applies to business sales by administrators, or is disapplied by reg. 8(7), when the EAT gets to decide Olds v Late Editions [5] and other cases this year. It might even provide guidance on whether the English administration is truly part of the rescue culture, or is a manifestation of a salvage culture. It ought not to be one thing in the EAT, and a different thing in the Companies Court.

Peter Cranston

President

 

[1] [2007] EWHC400 (Ch.)

[2] Oakland v Wellswood  [2008] UKEAT/0395/08/DM. On appeal to the Court Of Appeal, the EAT's decision was reversed on entirely different grounds, and the CA declined to decide the reg. 8(7) issue (ie: whether an administration was a proceeding initiated with a view to liquidation): see [2009] EWCA Civ. 1094.

[3] HH Judge Purle QC in Goldacre Offices Limited v Nortel Networks UK Limited  [2009] EWHC 3389,  in relation to the administration expenses regime, and distribution to unsecured creditors with leave under Sch B1, para 65(3)

[4]  Blair J in Re: Kaupthing Singer & Friedlander Limited  [2010] EWHC 316, in construing a subordination provision triggered on a "winding up" as also triggered in administration where a notice of distribution had been given.

[5]  UKEAT/0321/09/RN