You have instructions to commence proceedings for damages for personal injury against a defendant company only to find that the company has entered in to a Company Voluntary Arrangement (“CVA”). What procedural issues arise and what steps should be taken?
What is a CVA?
The long-awaited new Practice Direction – Insolvency Proceedings (PDIP), which came into force on 25 April 2018, has now brought procedure into line with the changes introduced by the significant amendments to the Insolvency Act 1986 (the Act) introduced last year and the Insolvency (England and Wales) Rules 2016 (IR 2016), as amended. This has finally brought to an end the agonisingly long period (over 12 months) in which the provisions of the previous Practice Direction have been at odds with the Act as amended and IR 2016.
In light of the radically and rapidly changing face of bricks and mortar retail, cases providing guidance on the way in which liabilities are to be dealt with in the course of the restructuring / insolvency process are extremely valuable not only for stakeholders and practitioners dealing with the consequences of those processes but also to those guiding and devising the strategies in the first instance.
Wright and Rowley v Prudential Assurance Company Limited is one such case arising out of the collapse of the British Home Stores (‘BHS’) retailing group in 2016.
A new wave of CVAs?
A company voluntary arrangement (CVA) is, provided the voting thresholds are met, a binding agreement made between a company and its creditors, designed to compromise a company’s obligations to its creditors.
As retailers and restaurateurs across the UK continue to show signs of financial distress, interest in the use of CVAs has increased. A common facet of a CVA is a focus on reducing rents and offloading unprofitable leases.
Compromised or full rent?
This article was first published for Thomson Reuters' Practical Law Dispute Resolution Blog.
On 20 October 2017 Registrar Derrett handed down judgment in the case of Thomas v Haederle (unreported), in which she gave reasons for dismissing a bankruptcy petition presented by the debtor (T) in the County Court at Norwich on 4 December 2014, pursuant to s 272 of the Insolvency Act 1986 (IA86), as it then was.
This interview was conducted by Lucy Trevelyan at LexisNexis. The views expressed by the interviewees are not necessarily those of the proprietor.
Property Analysis: A recent Court of Appeal decision on the payment of service charges, while correct in principal, was wrong on the facts, according to Peter Petts, barrister at Hardwicke Chambers.
Original News
Skelton and others v DBS Homes (Kings Hill) Ltd [2017] EWCA Civ 1139, All ER (D) 196 (Jul)
This article was first published in Insolvency Intelligence 2017 30(6) and is now available on Westlaw.
The High Court confirmed that it is generally not appropriate to present a winding up petition to recover sums due under a construction contract, particularly where those sums are disputed or there is a legitimate cross claim.