Trusts: Perpetuities and Accumulations Bill

This Bill might, if passed, have an impact on any trust arrangements your bank might use.  It was introduced to the House of Lords on 1 April 2009 and the second reading was on 28 April 2009.   It is based on recommendations made in the Law Commission’s 1998 Report.  (Why rush when you are considering things in perpetuity).   The old rules that prevent property being tied up indefinitely in trusts  and limit the extent to which trusts can accumulate income, are to be simplified and modernised.  If the Bill becomes law, which is probable, trusts in commercial transactions will be freed from unnecessary complexity.

The Bill is the first of a trial of two bills in a new House of Lords procedure for Law Commission Bills that are broadly accepted across the House.  The procedure will be reviewed.

Proposals for dealing with troubled companies

The law of corporate insolvency will be changed as indicated by the recent Budget speech (April 2009). Legislation to improve companies’ access to funding is planned. The Insolvency Service will start a consultation in June. The proposals would give viable large and medium sized companies the same opportunity now available to small companies for a moratorium while trying to come to an agreement with creditors.

The Insolvency Service will also consult on changes that would help give all companies access to additional funds to get back on their feet. New money lent to companies in Company Voluntary Arrangements or administration would be given priority. This could make it more attractive to lend to such companies allowing them to access extra funding when they need it most.

The overall aim of the Insolvency Service in making these proposals is to ensure that company rescues are encouraged to take place when they are appropriate. They also want to protect creditors as far as possible.

The Budget showed that the Insolvency Service will be investigating pre-pack sales. It will publish the first of a series of regular reports on its monitoring of the operation of pre-pack sales. The Statement of Insolvency Practice 16 issued earlier this year (see Bank Law Blog’s January 2009 post on pre-packs and SIP 16.) requires administrators to provide creditors with detailed reports explaining their decisions for a pre-pack administration as soon as they are appointed. Scrutiny of these reports by The Insolvency Service is designed to ensure that creditors are not being treated unfairly through the abuse of pre-pack sales.

Recent reforms of corporate insolvency law have included the introduction of Debt Relief Orders (6 April 2009), changes to rules on advertising, allowing more discretion to insolvency office-holders and work is in hand to modernise insolvency processes, including more use of electronic communications.

As yet, there are no published details on these proposals.

Symbolic demonstrations

A bank’s windows were smashed yesterday (1st April)  in Threadneedle Street, London.  88 people were arrested in protests the police say were mostly peaceful.   Today, outside the London Stock Exchange, demonstrators played a giant game of Monopoly with huge crates of fake money.  No doubt the bank is irritated at having to sweep up the glass and pay the repair bill (or perhaps that will be picked up by the taxpayer too), but have we become more symbolic in our demonstrating? Compare the six days of the Gordon Riots in 1780 when a mob rioted to support Lord George Gordon’s petition to Parliament to oppose legal rights for Catholics.  There was no standing police force and 458 people were killed or seriously wounded: “… the mob was on the point of taking over the city.  Ministers and opposition alike sent their wives and children out of town and prepared to mount a defence on the streets. … The rioting continued unchecked.  The mob … exploded the distilleries at Holborn so that the streets were flooded with spirits and the water supply to Lincoln’s Inn Fields became alcoholic.”  (Oh, bliss).  “The mob attempted to seize the Bank of England but its defenders … beat them off.  … Picadilly reverberated to the sound of gunfire and explosions.”

Quotes from Amanda Foreman, pp 82 ff  ”Georgiana: Duchess of Devonshire” Harper Collins 1998,  ISBN: 978-0-00-728575-4.

Bills: bank accounts and Scottish banknotes

A bill that proposes to require banks and building societies to offer retail customers a current and a savings account for no charge is going through Parliament.  It has already received its first (perfunctory) reading and the substantive, second reading will be held on 19 June.  The bill does stipulate that the accounts must be in credit for them to remain a free banking service.  It was presented by Frank Field, and as a private members bill, not one brought in by the government, it stands a high chance of being talked out of time.  This was the fate of the Scottish Banknotes (Acceptability in United Kingdom) Bill on 6 March.  That bill wants to require businesses not to distinguish between Scottish and Bank of England banknotes  as acceptable payment for goods and services and to give the OFT investigative powers in relation to breaches of the requirement.  A new date has been set for resuming the debate on 24 April 2009.

Bank charges case – to the House of Lords

The House of Lords have allowed the banks to appeal to them against the Court of Appeal’s decision that the issue of fairness of bank charges falls within the Unfair Terms in Consumer Contract Regulations.  See the most recent post by Bank Law Blogger on this.  Permission has been granted to appeal although we don’t have any dates for the actual hearing yet.