Key Point

Liability for utility bills arising in an administration after trading had ceased did not rank as an expense of the administration.

The facts

Key Point

The Court of Appeal has held that a UK company undergoing a financial restructuring was not entitled to recover VAT charged by accountants who prepared reports for the company's lenders use during the restructuring process.

The 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

Background

Key Point

The liquidation of an agent for service appointed by a Borrower under a loan agreement did not prevent the Lender from validly serving process on the Borrower by delivering documents to that agent.

The facts

A loan agreement contained the following clause:

"Service of process. Without prejudice to any other mode of service allowed under any relevant laws, each Borrower -

Liquidators are commonly appointed to a company where, prior to liquidation the company was a trustee of a trust. Often when the liquidators are appointed, the company has ceased to be the trustee and a replacement trustee has not been appointed.

In these circumstances, the company in liquidation is a bare trustee in relation to the trust assets and the liquidator will assume this role until a replacement trustee is appointed. Often a replacement trustee is not appointed.

Does the liquidator as bare trustee have a power to sell trust assets?

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

Secured creditors should not allow a liquidator to sell a secured asset without first:

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.