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17 November 2017
In certain circumstances the court will look to parallel statutory provisions where existing applicable statute does not accommodate the situation, as long as the latter is not offended, expanded or altered by doing so.
This application for directions was brought by the administrators of Lehman Brothers Europe Ltd (the "Company") on:
whether to make a substantial distribution of surplus to the Company's sole shareholder, Lehman Brothers Holdings plc, whilst the Company was in administration; and
the administrators' role in that distribution.
Under the Insolvency Act 1986, the procedure for making a distribution to a member is contemplated in the context of liquidation, rather than administration. To navigate around this, the administrators had devised a nifty strategy whereby the distribution would be made using the residual powers still vested in the directors and shareholders of the Company pursuant to the Companies Act 2006.
In this instance, the court could order directions in relation to a situation not contemplated or provided for in the usually applicable statute (the Insolvency Act 1986) by invoking mechanisms ratified within a parallel statute (the Companies Act 2006). This is distinct from needing to expand the remit of the existing rules, a route that had been rejected in the unreported Re Lehman Brothers Europe Ltd 25 June 2012. Further, allowing this did not offend the purpose of the administration, nor prejudice the creditors as a whole.
For further information on this topic please contact Katherine Hudson at Taylor Wessing by telephone (+44 20 7300 7000) or email (email@example.com). The Taylor Wessing website can be accessed at www.taylorwessing.com.
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