The Issue of Insolvency Laws in the UK - Essay Example

UK Insolvency Laws Introduction Insolvency laws in UK were made in order to protect creditors who end up losing money if a company that owes them ends up insolvent1. In such a case, the creditors are allowed to formulate a way to share among themselves the assets and equity of the firm that has become insolvent. However, while this is very useful in protecting the creditors and making it possible for the creditors to be able to share the available resources to try and cover their losses in case of such insolvency, sometimes it can bring in issue when the true ownership of the properties that were available at the insolvent company’s premises. For instance, if the insolvent company had in its custody property belong to another person or another company, the creditors must not included this property among the things they are going to take over from the insolvent firm2. In this regard, there must be a way to help in making sure that a standoff between such creditors and the owners of such property. Insolvency Act 1986 (c 45) was one of the laws in UK that were aimed at dealing with this issues of insolvency of companies. Companies Act 2006 was also implemented as a way to deal with the complicated nature of company insolvency. All these laws have been developed as a way to help dealing with the issue of the insolvency issues as his has been proven to be a very complicated issue ha must be looked in a serious way3. This is the case with the Reddington Building Supplies Ltd and Raymond4. Raymond must be able to prove that the products that were in custody of Reddington Building Supplies Ltd belongs to him and that they should not be included among the things that should be shared by the creditors. There are some arrangements within law as well as case laws that can be used to help Raymond to protest his interest5. The relevant case laws with regard to this issue are many and varied and have been as a result of UK courts dealing with such cases. In particular, the UK courts have been able to deal with cases where a dispute between creditors and people calling the assets of an insolvent company existed6. There are a number of issues that Raymond has to face. First of all, he had paid for some of the goods and in this case, the main issue is with the goods that he had not paid for. Raymond had not paid for the bricks and the other creditors to the Reddington Building Supplies Ltd can claim to have equal rights to these goods. However, even if he had not paid for them, he can still claim he owned them. One case law that he can use to argue his case is the Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd was UK insolvency case that was similar to the Raymond case. The case was between the Romalpa Aluminium Ltd who had entered into a contract with Aluminium Industrie Vaassen to be manufacturing and sullying aluminum products., the contract said that Romalpa Aluminium Ltd would retain the ownership of the products until Aluminium Industrie Vaassen had paid for them and Romalpa Aluminium Ltd had the right to sell them to other customers if the said customer was not able to pay for the products. Both the initial decision and the court of appeal decision found that the Aluminium Industrie Vaassen was the legal owners of the products even if the products had not been paid7. The issue was the fact that the Romalpa Aluminium Ltd had gone into insolvency before Aluminium Industrie Vaassen had picked their products and that the other creditors were claiming to share to goods owned by Romalpa Aluminium Ltd. Aluminium Industrie Vaassen claimed that it owned these goods and that they did not have to share these goods with the other creditors who were claiming to share the goods. The same case applies to Raymond who, even of he had not paid for the goods, had already owned them through contract agreement. In this case, Raymond can still claim to have owned the goods even if he had not paid for them. Even though Raymond had not paid for the bricks, the contract indicates that he already had owned these goods and according to the Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd, he stands a chance to have full ownership of these products without having to share with other creditors who were owed by Romalpa Aluminium Ltd. Arbuthnot Leasing International Ltd v Havelet Leasing Ltd8 is another case that included the issue of insolvency. In this case, Havelet Leasing Ltd had behaved in a manner that the court four to be fraudulent in that it had tricked the litigant (Arbuthnot Leasing International Ltd) by transferring its property and equity to another firm. In the judgment, the court referred to the judgment by saying that although the behavior of Havelet Leasing Ltd was not legally fraudulent, it amounted to a malfeasance. Raymond can use this case to argue his case. It is very necessary to be able for his to be able to prove that based on these case laws, the property at the Reddington Building Supplies Ltd. belonged to them as opposed to Reddington Building Supplies Ltd and must therefore not be shared with the other creditors to the firm in question. In this issue there are at least there issues that Raymond has to consider. These are as follows; The red brings which had not been paid for With regard to this one, there is going to be an issue because since the products were not paid for, the ownership of the property can be contended. It is possible for the creditors to the Reddington Building Supplies Ltd to contend that this particular property does not belong to Raymond but it belongs to Reddington Building Supplies Ltd. With regard to this property, Raymond can still argue that the property belongs to him and he can quote the Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd case. However, Raymond does not have to worry too much about this product because he had not already paid for this and therefore there is no direct financial loss that will be related to this if the property is taken by the creditors. However, there may be some other costs associated with the issue if he loses this property to the creditors. If for instance he had received these bricks at a bargain sale or at a discount, he will have to buy the products from another seller at a higher price if the creditors take over these goods. The second hand JCB digger With regard to this particular product, the creditors to Reddington Building Supplies Ltd can argue to this property does not belong to Raymond but belongs to Reddington Building Supplies Ltd and that they have a right to liquidate it. The reason the can argue this way is because there was a hitch with regard to this property. Raymond had not fully bought this property and had agreed to buy the property as it was even though it needed some repairs (it needed the tyres to be replaced). However, Reddington Building Supplies Ltd had replaced the tyres before Raymond had come for this property and this can be used to mean that the property belonged to Reddington Building Supplies Ltd. If the tyres become an issue, Raymond can argue that the creditors can take the tyres and leave the machine because this belonged to his. The third issue is with regard to all the other products Raymond had paid for these products and in this case they definitely belonged to him. Of all the case, this would be the ones that Raymond can easily protect from being taken over by the creditors who Reddington Building Supplies Ltd owed by the time it was being declared insolvent. Based on UK insolvency laws as well as case laws, Raymond had a big chance to reclaim and redeem these properties from the liquidator. The law is on his side on most of the cases especially with regard to the product he had already paid for. He can easily prove that although these goods were in the custody of Reddington Building Supplies Ltd, the goods rightfully and lawfully belonged to him. He may however have a problem with proving that some of the goods he had not paid for, such as the bricks, belonged to ho,. There may also be an issue with regard to the JCB digger because the status of this product with regard to his purchase was not clear. However, Raymond can be assumed that he will not lose the money that he had paid for the other products because for these products, it is very evident that the products belonged to him and so the liquidator has no right to include them with the other assets that belonged to Reddington Building Supplies Ltd. Bibliography Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd [1976] 1 WLR 676 . Arbuthnot Leasing International Ltd v Havelet Leasing Ltd (No 2) [1990] BCC 636. Earnest, P. (2013). Liquidation Laws: Insolvent and Creditors Rights . London, UK: Latff Books. Gibson, G. (2012). Modern Business Law in UK. London, UK: Oxford Press. Hubert, P. (2012). UK Insolvency aCase laws. Oxford, UK: Oxford University Press. Moses, P. (2012). Modern UK Insolvency Laws. Oxford, UK: Oxford University Press. Weston, P. (2013). Dealing With Debted Insolvent Firms. London, UK: Cengene Learnign Books. Wilson, P. (2015). Insolvent Comaonies Law in UK, dealign With Creditor Competitio for Equity. London, UK: Cenegen Learning . Read More