Re Trident Fashions PLC: Exeter City Council v Bairstow [2007] EWHC 400 (Ch)

In March 2007 the High Court ruled that that non-domestic rates are payable as an expense of the administration as a “necessary disbursement” under Rule 2.67(1)(f) Insolvency Rules 1986 (IR), in priority to payment of the administrator’s remuneration.

On 29 March 2016, Abdul Aziz Al Ghurair, Chairman of the UAE Banks Federation (UBF), announced a new “rescue initiative” in relation to SME debt in the United Arab Emirates, under which UBF member banks might impose a 90-day “standstill” on use of judicial means to enforce the payment of SME debts.

Seeking to have an independent examiner investigate a debtor or its management can be a powerful tool available to creditors and other interested parties in a bankruptcy case. Typically, a party might request that an examiner be appointed if the debtor or its management is suspected of fraud or other misconduct. The low cost associated with making the request, together with recent positive outcomes for requesting creditors, may help to increasingly popularize the use of examiner requests by parties seeking leverage in bankruptcy plan negotiations.

Re Powerhouse Limited: Prudential Assurance Company Limited v PRG Powerhouse Limited [2007] EWHC 1002 Ch Guarantees are widely used in commercial transactions to provide assurance to creditors that debts or other obligations owed to them are discharged fully in the event the principal debtor fails to perform. This assurance was shaken by the steps taken in early 2006 by PRG Powerhouse Limited (Powerhouse) to enter into a company voluntary arrangement (CVA) that contained proposals to release certain parent company guarantees given to landlords of premises being vacated by Powerhouse.

Introduction to CVAs

A company voluntary arrangement (“CVA”) is a tool available to a company in financial difficulty to restructure its debts. In contrast to other insolvency procedures, the directors remain in control of the business which continues to operate broadly as normal, subject to the supervision of an insolvency practitioner (“the Supervisor”).

The main aim of the revision of the Hungarian Bankruptcy Law, effective September 2009, was to make the bankruptcy proceeding more attractive for creditors as well as debtors, to make clearing debt in the course of a bankrutpcy proceeding more effective and, with the increasing number of bankruptcy agreements, to decrease the number of liquidators.  

In a decision that will have important repercussions for creditors with the benefit of guarantees, the High Court this week has held that a company in financial difficulties may not propose a voluntary arrangement which is unfairly prejudicial on its terms to certain creditors.

Re Powerhouse

Sophisticated distressed investors know the benefits of acquiring assets through a § 363 sale in a bankruptcy case. The primary benefit, of course, is acquiring assets free and clear of pre-existing liens, claims and interests. There are some occasions, however, where it is not practical for a buyer to request that a sale be run through a bankruptcy process, especially when the value of the assets and/or a sharp decline in the assets’ value does not justify the time and expense associated with a chapter 11 filing.

THE PERENNIAL PROBLEM OF UNPAID DEBTS – YOUR RECOVERY OPTIONS

On 2 March 2007 the High Court handed down the first decision on whether non-domestic rates are payable by an administrator as an expense, and in priority to his remuneration, under Rule 2.67 Insolvency Rules 1986 ("IR"). The judge determined that rates in respect of occupied business premises are a "necessary disbursement" (Rule 2.67(f) IR) of an administration.

Although it was not argued, the judge also expressed the view that this liability to pay rates incurred during the period of the administration would be unaltered if the property were unoccupied during this time.