Debt exchanges have long been utilized by distressed companies to address liquidity concerns and to take advantage of beneficial market conditions. A company saddled with burdensome debt obligations, for example, may seek to exchange existing notes for new notes with the same outstanding principal but with borrower-favorable terms, like delayed payment or extended maturation dates (a "Face Value Exchange"). Or the company might seek to exchange existing notes for new notes with a lower face amount, motivated by discounted trading values for the existing notes (a "Fair Value Exchange").

A High Court ruling in England today has provided a significant clarification of the law relating to payment of rent as an administration expense.

In Leisure (Norwich) II Limited v Luminar Lava Ignite Limited (in administration), the Court confirmed that rent payable in advance prior to the appointment of administrators is not payable as an expense of the administration, even if the administrators continue to use the property. This means that the rent would not be given priority over other unsecured debts.

One of the primary fights underlying assumption of an unexpired lease or executory contract has long been over whether any debtor breaches under the agreement are “curable.” Before the 2005 amendments to the Bankruptcy Code, courts were split over whether historic nonmonetary breaches (such as a failure to maintain cash reserves or prescribed hours of operation) undermined a debtor’s ability to assume the lease or contract.

Last week the High Court of England and Wales revoked a company voluntary arrangement (CVA) promoted by retailer Miss Sixty in a damning judgment that called into question the conduct of the practitioners involved. The case of Mourant & Co Trustees Limited v Sixty UK Limited (in administration) [2010] could end so-called guarantee stripping – where the CVA purports to discharge guarantees given by a third party – and provide powerful ammunition to landlords seeking to negotiate future CVAs with tenant companies.

His Honour Judge Purle QC in Re Cornercare Limited [2010] EWHC 393 (CH) has clarified English law on the filing of successive notices of intention to appoint administrators. He has held that there is nothing in the relevant provisions of the Insolvency Act 1986 ("IA 1986") to prevent the filing of successive notices of intention to appoint administrators, where the original notice of intention to appoint an administrator had not been acted upon for good reason.