Summary

Editor’s Note: Our good London colleague Ed Marlow recently published this as a Bryan Cave client advisory.

The case of K/S Victoria Street v House of Fraser (Stores Management) Ltd in 2011 clarified several important points under the Landlord and Tenant (Covenants) Act 1995 relating to the release of covenants and the responsibilities of tenant and guarantor on assignment of a lease.

In giving the judgement for K/S Victoria Street Lord Neuberger commented obiter that the anti-avoidance provisions of the 1995 Act may prevent an assignment from a tenant to its guarantor, even if both parties wished it.

Key point

• Purely voluntary redress payments are not caught by a paragraph 99 charge

The facts

The BHS CVA is now in effect following a successful ‘yes’ vote on 23 March 2016 when 95% of creditors voted in favour of the proposals.

There is nothing quite like obtaining a new customer or getting a new big sale - the prospect of recurring revenue from a new source, the validation of business strategy, or the culmination of a successful negotiation.

However, there is nothing more disheartening than when a new customer is unable or unwilling to pay for the product you just shipped or services you just provided. Perhaps there is one thing that is worse, when a long-term customer fails to pay.

The Jackson reforms to no-win no-fee agreements and the UK government's proposal to ban general damages for minor personal injuries have sent many UK firms into a tailspin.

The English High Court in Powertrain Ltd, Re [2015] EWHC B26 considered the issue of whether a liquidator should be authorised to effect further distributions in favour of a company's known creditors without regard to possible further claims that could emerge against the company. 

The Court noted that there is a balance to be struck between the desirability of distributing assets to known creditors sooner rather than later and the potential injustice of leaving someone who has a valid claim with no effective remedy.

Tough trading conditions

Introduction

Generally, directors are focused on making a success of the business to which they are appointed and the prospect of insolvency and the potential for personal liability often seems remote. Indeed, many directors will never have to face the difficult decisions associated with a struggling business. However, when they do, they often rely on the advice of experienced insolvency professionals.