No duty of care owed for negligent bank reference to undisclosed principal

The Supreme Court has held that a bank which negligently provided a favourable credit reference for one of its customers did not owe a duty of care to an undisclosed principal who acted on that reference.

There has been a series of high profile tenant company voluntary arrangements (CVAs), particularly in the retail and casual dining sectors. Many landlords have been hit by closure of underperforming stores, and by rent cuts on those remaining open. Here we outline ten points for landlords on what CVAs are, how they are entered into and what landlords can do to protect themselves.

What is a CVA?

A CVA is a statutory process, supervised by an insolvency practitioner. It allows a company in financial difficulty to:

The UK government announced on 26 August 2018 that it will legislate to change aspects of the UK restructuring and insolvency systems. The reforms are a response to recent high-profile domestic corporate insolvencies and the various issues highlighted in those matters.

In a closely watched battle between FirstEnergy Solutions (“FirstEnergy”) and the Ohio Valley Energy Corporation (“OVEC”) that could have significant implications for the U.S. power sector, the U.S. Bankruptcy Court for the Northern District of Ohio asserted its primacy over the Federal Energy Regulatory Commission (“FERC”) in deciding whether to allow FirstEnergy to repudiate certain FERC-regulated power purchase agreements (“PPAs”).

Early last week PricewaterhouseCoopers Inc., in its capacity as trustee in bankruptcy for Sequoia Resources Corp., filed a statement of claim against Perpetual Energy Inc., attempting to unwind an asset sale from Oct. 1, 2016. Alternatively, PwC is seeking $217-million in damages. Along with Perpetual, PwC has named certain subsidiaries and its CEO, Susan Riddell Rose, as defendants.

In its statement of claim, the plaintiff is relying upon legal principles associated with oppression, reviewable transactions in insolvencies and regulatory law in support of its action.

The Technology and Construction Court (TCC) has delivered a significant judgment in Michael J Lonsdale (Electrical) Ltd v Bresco Electrical Services Ltd (in liquidation) [2018] EWHC 2043 (TCC) where the company seeking to refer a dispute to adjudication was in liquidation. The substance of the dispute related to the contractor's claim for payment allegedly due for work completed, and damages for loss of profits.

The contract and the facts

Early last week PricewaterhouseCoopers Inc., in its capacity as trustee in bankruptcy for Sequoia Resources Corp., filed a statement of claim against Perpetual Energy Inc., attempting to unwind an asset sale from Oct. 1, 2016. Alternatively, PwC is seeking $217-million in damages. Along with Perpetual, PwC has named certain subsidiaries and its CEO, Susan Riddell Rose, as defendants.

In its statement of claim, the plaintiff is relying upon legal principles associated with oppression, reviewable transactions in insolvencies and regulatory law in support of its action.

In our update this month we take a look at some of the recent cases that will be of interest to those involved in insolvency litigation. These include:

In an insolvency, the three heads of set-off (contractual, legal and equitable) each represent a powerful means of effectively jumping the queue and circumventing the ordinary priority scheme between a company's secured and unsecured creditors.

The new housing administration regime for registered providers of social housing is now in force. Our latest Insight introduces the new legislation and highlights some of the key ways in which a housing administration will differ from a normal administration process.