Retail Company Voluntary Arrangements (CVAs) are becoming an increasingly popular means of minimising liabilities and creating breathing space for tenants during a difficult trading environment on the High Street. Where does this leave landlords?

Originally published on LexisLibrary and LexisPSL

Revisiting over 150 years of case law, the High Court has resolved a question on which both the courts and textbooks had given conflicting answers: is a director's liability for payment of a dividend which is unlawful as a result of incorrect accounts fault-based or strict?

In Skandinaviska Enskilda Banken AB v Conway & another [2019] UKPC 36, the Privy Council upheld the decision of the Court of Appeal of the Cayman Islands that the appellant bank, SEB, was required to repay redemption payments held to be preferences notwithstanding that it had received the funds in the capacity of nominee, and had already distributed the funds to the beneficiaries without any ability to recover them.

Facts

In this week's update: directors did not need to consider the rights of creditors when declaring a dividend as the company was not insolvent, the Law Commission is seeking views on the law of intermediated securities, polling information can be inside information and a couple of other items.

Court considers whether demerger by dividend was valid (part 4)

In Oversea-Chinese Banking Corporation Limited v ING Bank NV [2019] EWHC 676 (Comm), Moulder J rejected a purchaser’s claim that their damages for breach of warranty should be calculated by reference to a hypothetical indemnity which they would have negotiated with the seller had the true position been disclosed prior to entering into the agreement.

The Government’s final report on how to deal with insolvent airlines has been criticised by major UK carriers for its headline-grabbing suggestion of a new Flight Protection Scheme which would see a levy of about 50p put on customer fares to cover the costs of any future repatriation exercise. But the implications of the report are potentially far more significant and wide-ranging for all stakeholders.

On closer analysis, the report could see changes in:

The lender's dilemma

Lenders who take security over shares in an English company have to decide whether to take either:

• a legal mortgage by becoming registered owner of the shares
• an equitable mortgage or charge with the chargor remaining the registered owner.

A legal mortgage gives the lender the right to vote subject to the terms of the mortgage document and prevents the chargor from disposing of legal title to the shares to a third party, as the lender is the registered owner of the shares.

The development of new powertrain technology; challenges within established markets, such as diesel emissions issues; and falls in automotive production – production in the United Kingdom has fallen during the last 12 consecutive months – have had a significant impact on the automotive and mobility industry.

On 11 July 2019, HMRC published a policy paper discussing measures which are aimed at those  taxpayers who “unfairly seek to reduce their tax bill by misusing the insolvency of companies”.  This will be achieved by making directors and other persons connected to those companies jointly and severally liable for the avoidance, evasion or “phoenixism” debts of the corporate entity.

An explanatory note and draft legislation set out the conditions that must be satisfied in order to enable an authorised HMRC officer to issue a “joint liability notice” to an individual.