Having enforceable security over all of a borrower’s assets is obviously of primary importance to a lender.  However, where a borrower occupies leased premises, ensuring the lender has quick and reliable access to the collateral is equally important, especially if the landlord proves to be unco-operative after a borrower’s default.  Although court-ordered access to a borrower’s leased premises can be sought after a borrower’s loan default, a landlord waiver obtained prior to an initial advance of a loan can bring some added certainty to the realization process outside of a bankrup

The case of White v Davenham Trust Ltd, has reaffirmed that a creditor can choose its own method of enforcing a debt which has been guaranteed even where it might hold security for that debt.

The federal government has stopped fighting court rulings that allowed an import company, which was facing steep penalty tariffs, to file bankruptcy and transfer its assets to a new business formed by the debtor's principals. The move is important to small to mid-size companies that want to rid themselves of substantial liabilities by selling assets to a new entity with identical ownership, "free and clear" under section 363 of the Bankruptcy Code.

The court has a limited discretion not to make a bankruptcy order where the debt is the subject of a statutory demand which has not been paid and is outstanding at the time of the bankruptcy petition hearing.

In circumstances where a debtor lacks mental capacity to deal with a statutory demand and subsequent bankruptcy petition, the court will rescind or annul a bankruptcy order.

The EAT's judgment

The Insolvency Service has published its policy, which came into effect on 1 December 2010, on realising a bankrupt's principal residence where the Official Receiver (OR) is appointed as the trustee in bankruptcy.

The policy provides that the OR will not take any steps to market the bankrupt's interest in the property for a period of two years and three months from the date of the bankruptcy order. However, the OR can accept any unsolicited offer in relation to the property if it is in the best interest of creditors. After the expiry of the two years and three months:

A notice of intention to appoint administrators (a Notice), although not an absolute bar to making a final charging order, will generally act as a moratorium. This prevents creditors from taking steps to enforce their claims against a company without the permission of the court.

A guarantor can be made bankrupt where the terms of the guarantee create a debt obligation.

The court has held that a statutory demand is valid despite the high default interest rate on an underlying loan.