There has been an influx of company voluntary arrangements (“CVAs”) in recent times, as retailers fight to rescue their UK high street stores. Retail CVAs accounts for the highest proportion of CVAs at 19%. As more and more CVAs are approved, we consider some of the recent trends seen in the retail sector which showcase the flexibility of a CVA and reflect the demands of landlords whose support is vital to the continuing viability of a business.

What is a CVA?

The proposal to reinstate Crown preference in insolvency has met resistance from all angles; the insolvency profession, turnaround experts, accountants, lawyers and funders. But despite HMRC’s bold statement in its consultation paper that the re-introduction of Crown preference will have little impact on funders, it is clear following a discussion with lenders that it may well have a far wider impact on existing and new business, business rescue and the economy in general than HMRC believes.

With the gradual opening of energy supply markets allowing new energy providers to challenge the established providers and bring increased competition to the market, the last two decades have seen an increase in smaller energy providers entering the market and sharing a growing customer base. But what happens to the customers when an energy provider becomes insolvent?

In our update this month we take a look at some recent decisions that will be of interest to those involved in insolvency litigation. These include:

Creditor not obliged to take steps in foreign proceedings to preserve security

No duty of care owed for negligent bank reference to undisclosed principal

The Supreme Court has held that a bank which negligently provided a favourable credit reference for one of its customers did not owe a duty of care to an undisclosed principal who acted on that reference.

There has been a series of high profile tenant company voluntary arrangements (CVAs), particularly in the retail and casual dining sectors. Many landlords have been hit by closure of underperforming stores, and by rent cuts on those remaining open. Here we outline ten points for landlords on what CVAs are, how they are entered into and what landlords can do to protect themselves.

What is a CVA?

A CVA is a statutory process, supervised by an insolvency practitioner. It allows a company in financial difficulty to:

The case of Davey v Money and Anor (2018) EWHC 766 (Ch) should serve as a gentle warning to secured creditors to be aware of the level of their involvement in the administration of a customer.

Background

Angel House Development Limited (“AHDL“), a property development company, borrowed £16 million from Dunbar Assets Plc (“Dunbar“) in order to fund the purchase and redevelopment of a property, Angel House, in Tower Hamlets. Dunbar took security for the loan(s) in the form of a debenture.

In our update this month we take a look at some of the recent cases that will be of interest to those involved in insolvency litigation. These include:

The Court of Appeal considers 'reasonable adjustment' in the context of possession proceedings

The first case in which the Equalities legislation has been raised as a defence to a mortgagee's claim for possession has recently been before the Court of Appeal.