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.
The United States Bankruptcy Court for the Southern District of New York has ruled that a creditor or trustee seeking to recover a subsequent transfer under Section 550(a) of the Bankruptcy Code need not obtain a judgment of avoidance against the subsequent transferee before proceeding with the recovery action.
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.
On October 14, 2022, the U.S. Court of Appeals for the Fifth Circuit issued a long-awaited ruling on whether Ultra Petroleum Corp.
In Short
The Situation: Courts have disagreed over whether a make-whole premium triggered by a borrower's bankruptcy filing must be disallowed as unmatured interest. They have also disputed whether the "solvent-debtor exception" requiring the payment of postpetition interest to unimpaired unsecured creditors of a solvent debtor survived the enactment of the Bankruptcy Code. Finally, courts have split on what rate of postpetition interest unimpaired unsecured creditors of a solvent debtor are entitled to receive.
In Short
The Situation: Bankruptcy courts have split on what rate of post-petition interest unimpaired creditors of a solvent debtor are entitled to receive. Bankruptcy courts have variously ruled that such creditors were entitled to the contractual rate of interest, interest at the federal judgment rate (about the rate on a one-year Treasury bill) as of the bankruptcy petition date, or an equitable rate. Another possibility is that no interest is payable at all.
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.
Key points
- The High Court has ruled that, where a tenant goes into administration, rent which is payable in advance and falls due before the commencement of the administration is not recoverable by the landlord as an administration expense
- Landlords must take their place with other unsecured creditors in relation to sums payable before the appointment of administrators, even if they relate to a period during which the administrators had use of the property
Background