The High Court has rejected the argument that amounts owing to British Gas Trading Ltd (BGT) under post-administration, deemed contracts for the  provision of gas and electricity are automatically classed as expenses of the administration. The  court has reserved for consideration, however, whether and if so how an administrator’s conduct may  give the liability super priority or bring the salvage principle into play.

Background and preliminary issue

In the much anticipated decision of Belmont Park Investments PTY Limited v BNY Corporate Trustee Services Limited and Lehman Brothers Special Financing Inc [2011] UKSC 38 the Supreme Court has unanimously dismissed the appeal of Lehman Brothers Special Financing Inc (“LBSF”) and in so doing provided clarification as to the scope and application of the anti-deprivation rule (the “Rule”).

Following an informal consultation in late 2008, the DWP is now consulting formally about changes to the Employer Debt Regulations made under s75 Pensions Act 1995. The consultation document can be found at www.dwp.gov.uk/consultations/2009.

The main proposed changes are intended to facilitate corporate restructurings, but other changes are designed to address some technical problems with the Regulations.

Corporate restructurings

The new month sees a partial re-instatement of the legislation permitting creditors to serve winding up petitions on companies. However, the UK Government has adopted a softly, softly approach; this is seen from the temporary increase in the amount that must be owed from the modest £750 to £10,000 and the requirement for creditors to seek proposals for payment from a debtor business, giving them 21 days for a response, before they can proceed with winding up action. The measures are said to protect small businesses as they seek to rebuild their stability.

So you have a freezing order against a start-up company, now what? Can that start-up use the assets which are the subject of your order, or any of its other assets, to continue to pursue its risky business, or must it stay idle and wait for the inevitable?

The High Court gave its ruling yesterday in the case of Discover (Northampton) Limited and others v Debenhams Retail Limited and others [2019] EWHC 2441 (Ch), rejecting four of the five grounds on which the Applicants disputed the validity of the company's Creditors Voluntary Arrangement ("CVA"), which was approved by creditors in May 2019.

The regulatory amendments drawn up by the Secretary of State for Work and Pensions following the outcome in Trustees of Olympic Airlines SA Pension &Life Assurance Scheme v Olympic Airlines SA have been drafted narrowly and may end up protecting no one other than the beneficiaries of the Olympic Airlines pension scheme.

The issue

The Government is proposing to amend (for a twelfth time!) the Regulations under s75 Pensions Act 1995. The amendments would make it easier to vary the basis on which liability is shared between employers.

Background – the Regulations as they stand

In a recent case1, the High Court concluded that it was right to sanction schemes of arrangement which formed part of a wider debt restructuring that excluded out-of-the-money junior creditors. In doing so, it valued the distressed companies on a going concern basis.

Background

Kwasi Kwarteng, UK Business and Energy Secretary is reported to have said on 20 September that “My task is to ensure that any energy supplier failures cause the least amount of disruption to consumers”.

Wholesale day-ahead gas prices in the UK are reported to have jumped some 9% on 20 September alone. The rise is as a result of a number of factors including increased demand in Asia, lower supplies of gas from Russia and increase in demand as countries emerge from lockdown restrictions and economies start to pick up once more.