Introduction

Two shareholders of KBBO have obtained recognition in the English High Court of their Abu Dhabi bankruptcy process.

Protecting your business from exposure to supplier and customer insolvency

The risk of unforeseen counterparty customer or supplier financial distress and failure amidst the on-going challenges for businesses from COVID-19 means that pre-emptive legal and operational protections against the risk of heavy financial loss or business disruption from customer/supplier failure are more valuable than ever.

On 30 May 2018, Law No. 22 of 2018 with respect to the Reorganization and Bankruptcy Law (the Bankruptcy Law) was introduced in the Kingdom of Bahrain (Bahrain), repealing Legislative Decree No. 11 of 1987 with respect to the Bankruptcy and Composition Law (the Old Law). The Bankruptcy Law recently came into force on 7 December 2018 and represents a modern and extensive reformulation of the bankruptcy regime in Bahrain.

Application to debtors

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.

In the recent decision of Topland Portfolio No.1 Limited v Smiths News Trading Limited [2014] EWCA Civ 18, the Court of Appeal has given a timely reminder of the need for landlords to tread carefully when dealing with leases to ensure that a tenant guarantee remains effective.

In the event of a tenant becoming insolvent, it is clearly important for a landlord to know where rent payable ranks in administration. A recent landmark decision handed down by the High Court strengthens the position of landlords by deciding that rent can now be more widely payable as an expense of the administrator.

Background

Simply, if rent is ranked as an expense of the administration1 then it is almost always discharged in full as a mandatory expense of the administrator, rather than being placed with lower priority creditors.