In the Matter of System Building Services Group Limited (In Liquidation) [2020] EWHC 54 (Ch), the court confirmed that a director’s fiduciary duties continued after the appointment of an administrator or liquidator and that the subsequent purchase from the administrator/liquidator of a property at an undervalue was in breach of those duties. As a result, the property was declared to be held by the director on a constructive trust for the company.
Section 239(5) of the Insolvency Act 1986 (the “1986 Act”) limits the jurisdiction to reverse a preference to situations where “the company which gave the preference was influenced in deciding to give it by a desire to produce” the prohibited result. This involves a subjective enquiry which turns on the relevant actor’s state of mind.
The famous and respected Beales department store chain has entered into administration, an insolvency procedure provided under the Insolvency Act.
It is always depressing when any company fails and is forced to enter into administration, let alone a prestigious business such as Beales with its 139-year-old history. The ripples of such an insolvency not only impact upon its 1300 employees, but it is also painfully felt amongst its suppliers, landlords and of course the greater community.
Retail, as a sector, has long been under pressure from increased competition from online retailers, which has resulted in reduced footfall on the high street, affecting many companies, including many well-known names.
Between 2016 and 2019, 13 of 23 company voluntary arrangements (CVAs), which are used by UK businesses to reduce their debts, saw their group going into administration, while other companies that did not agree a CVA ended up seeking investors to buy the business.
What is a CVA?
It is extremely sad to hear the news that Katie Price has been declared bankrupt.
Although the stigma of bankruptcy may have disappeared, it is still an extremely sobering event when an individual fails financially and is declared bankrupt by a court. In an increasingly materialistic world, bankruptcy is an ever-common event in society.
To secure an order for the #winding-up of a Quasi-Partnership company on the Just& Equitable ground, is it necessary only to show that mutual trust and confidence between the shareholders/quasi-partners has broken down? Hardwicke investigates the recent case of Badyal v Badyal & Ors [2019] EWCA Civ 1644
Background
2018 was seen by many as the ‘year of the CVA’ and the year of the so -called ‘Retail CVA’ in particular. Such CVAs have been used in an attempt by companies operating in the retail and casual dining sector with burdensome leases to reduce the cost of their premises whilst continuing to trade.
2019 was widely expected to be the year in which there was a challenge by a landlord under s.6 of the Insolvency Act 1986 (‘the Act’) to the use of CVAs to force a rent reduction, without comparable cuts to other creditors and so it has proved.
Recently, the British Chamber of Commerce (BCC) warned that economic conditions are weakening and businesses are struggling, following a survey they have conducted of 6,600 companies employing 1.2 million workers. Their research found that domestic and export sales are falling, and services firms have seen a decrease in work in the three months to September. This has prompted fears that the UK’s economy may fall into recession.
The recent case of Sell Your Car With Us Ltd v Anil Sareen will be of interest to practitioners in Corporate Insolvency as it provides a useful reminder that there is no strict rule that the winding up procedure is inapt for mere debt collection.
The Facts:
The creditor (“AS”) had engaged the debtor company (“SYC”) to sell his Maserati Levante sports car and on completion of the sale to deposit the proceeds in his bank account. Communications were agreed to be conducted by email.