Key points
When deciding whether to grant an order that administrators may sell secured assets as if they are not subject to security the court will:
- carry out a balancing exercise as between the prejudice to the secured creditor and the prejudice which would be suffered in the administration; and
- protect the secured creditors' rights by ensuring that the assets subject to security were valued appropriately taking into account the circumstances of the administration.
Facts
Key Point
Two recent cases have resulted in innovative structures for restructuring the finances of groups of companies being sanctioned by the English Courts pursuant to schemes of arrangement. The trend for using such a mechanism for financial restructuring shows no signs of abating. On the contrary the innovative scope of such schemes appears to be expanding
Stemcor restructuring
The scheme
Key points
The court has jurisdiction to order the UK Registrar of Companies to replace previously filed administrators' proposals.
The Facts
The administrators of a company filed a statement of proposals with the Registrar but then sought to replace the proposals because they contained information that the company was obliged to keep confidential. The administrators argued that:
Key Point
The Graham Review into pre-pack administrations suggests beefing up SIP16 and creating new steps in the sale process where the sale is to a connected party but stops short of proposing new legislation.
The Graham Review
Key Point
Neither failure to obtain debtor's consent to modifications to an IVA proposal, prior to the creditors' meeting; nor the unauthorised exercise of a proxy at a creditors' meeting render an approved IVA a nullity.
The facts
In a landmark decision Pillar Denton Ltd and Others v Jervis and Others [2014] EWCA Civ 180, a group of the UK's largest landlords have successfully overturned previous High Court cases that had allowed insolvent tenants to continue trading from their premises without paying rent. The landlords in this case, which involved the retailer GAME, have been allowed to recover £3,000,000 in outstanding rents from the period of the tenant's administration.
But is it GAME over?
Pillar Denton Ltd and Others v Jervis and Others [2014] EWCA Civ 180
Summary – What happened?
A group of the UK's largest landlords have successfully overturned previous High Court decisions that had allowed insolvent tenants to continue trading from their premises without paying rent. The landlords in this case, which involved the retailer GAME, have been allowed to recover £3,000,000 in outstanding rents from the period of the tenant's administration.
Key point
An English winding up does not cease to have effect when an overseas company is dissolved under the law of its state of incorporation.
The facts
Agrenco Madeira – Comercio Internacional LDA (the "Company") was incorporated under the laws of Portugal in March 2004. The Company presented a winding up petition in England in August 2009. Its centre of main interests was in Brazil and therefore the EC Regulation on Insolvency Proceedings did not apply. The Company was wound up in England as an unregistered company in October 2009.
Key point
Under English law there is a clear public interest in ensuring the timely and efficient administration of insolvent estates and parties should comply with all time limits in the Insolvency Rules 1986 unless there are good reasons for requiring more time.
The facts
Key point
The equitable rules designed to protect guarantors from amendments to the original financing agreements made without his consent do not apply to indemnities under English law.
The facts
A company entered into factoring arrangements. The directors entered into indemnities in favour of the factor.