On 20 November 2024, the UK Supreme Court delivered its judgment in the case of Kireeva v Bedzhamov1. The court ruled that a Russian bankruptcy trustee has no claim over a bankrupt's property in Belgrave Square on the basis that the court has no jurisdiction to assist a foreign bankruptcy trustee in respect of immovable property located in England and Wales and that such property is unaffected by a foreign bankruptcy order. This decision reaffirms the immovables rule, which (subject to exceptions) protects immovable property such as land from foreign bankruptcy claims.
1. My tenant is in administration, do they have to pay the full rent and is the administrator personally liable?
The company in administration has to pay rent as an administration expense for each day that the company occupies or uses the property for the benefit of the administration. The administrator is not personally liable, but the rent is payable as a priority expense ahead of the administrator's fees.
In a recent ruling, the U.S. Court of Appeals for the Eleventh Circuit examined whether circuit courts have jurisdiction to hear direct appeals of unauthorized bankruptcy court orders that have not been reviewed by a district court. This was an issue of first impression in the Eleventh Circuit. The appellate court held that a bankruptcy court’s ruling in a non-core proceeding that has not been reviewed by the district court carries no adjudicative authority and is therefore not directly appealable to the circuit court.
The Third Circuit Court of Appeals, in an opinion authored by Judge Thomas Ambro, has reversed two district court opinions and refused to allow a company to use a Chapter 11 bankruptcy filing as a means to reduce interest on its debt obligations. Specifically, the court held that filing for bankruptcy would not excuse a debtor from its obligation for a “make-whole” payment otherwise due to its lenders.
On May 4, 2016, the Court of Appeals for the Third Circuit held that a bankruptcy settlement in the form of a tender offer did not violate the principles of the bankruptcy process. See opinion here.
On March 1, 2016, the U.S. Supreme Court heard argument on the seemingly simple question of what “actual fraud” means. The Court’s decision will have a significant impact on the reach of the exception to discharge under Section 523(a)(2)(A) of the Bankruptcy Code.
A district court judge in the Middle District of Pennsylvania recently vacated a bankruptcy court’s decision allowing rejection of an oil and gas lease under section 365 of the Bankruptcy Code. The District Court held that a debtor’s oil and gas lease was a conveyance of an interest in real property and not an executory contract or unexpired lease that could be rejected in bankruptcy under Section 365 of the Bankruptcy Code.
Phones 4u went into administration on 15 September 2014 following a decision by EE not to renew its contract. At the time of writing, all 560 stores and 160 concessions have been closed, pending a decision by the firm’s administrator whether to continue trading or break the company up in deals with, amongst others, EE and Vodafone.
This week the Court of Appeal has heard the long awaited appeal in Jervis and another v Pillar Denton Limited (Game Station) and others, better known as the Game Station case, which (depending on the outcome) may trigger a drastic change to the way in which rent in administration is treated.
Gym chain Fitness First is the latest high street name to propose a company voluntary arrangement (CVA) to its creditors. The chain currently runs more than 140 clubs in the UK but the arrangement proposes that 67 will be transferred to other operators within six months. Landlords will be reviewing the terms of the proposed CVA carefully.
A CVA is an agreement reached by a corporate debtor with its unsecured creditors. It is generally seen as a quicker and less formal route out of trading difficulties than administration.