In a year fast becoming dubbed the “year of the CVA” in the retail sector, there was a cautionary tale for insolvency practitioners following the recent High Court judgment in Re SHB Realisations Ltd (formerly BHS ltd (in liquidation).

The timeline of the case

The Facts

Mr Walker (the “First Respondent”) was appointed as liquidator of Domestic & General Insulation Limited (the “Company”) under the member’s voluntary liquidation procedure. Several months later the liquidation of the Company was converted into a creditor’s voluntary liquidation and Scott Bevan and Simon Chandler (together, the “Applicants”) were appointed as joint liquidators. The appointment took place during a creditors meeting which was convened by the First Respondent.

In Ziggurat (Claremont Place) LLP v HCC International Insurance Company plc [2017] EWHC 3286 (TCC) the court considered a claim under an amended ABI Model Form Guarantee Bond.

As a result of a bespoke clause the Contractor's insolvency was enough to trigger recovery under the Bond, but if a breach of contract was required, the Contractor was in breach of the contract by failing to pay the amount due to the Employer following insolvency.

The High Court has held that two director-shareholders of a company who were unsuccessfully prosecuted for fraud could not claim back the drop in the value of their shares when the company’s business failed.

What happened?

Collapsed retailer British Home Stores cannot challenge its own company voluntary arrangement as an unenforceable contractual penalty and must repay rental discounts to its landlords, the High Court in England and Wales decided yesterday.

The case, in which Hogan Lovells represented the successful landlord, provides important guidance on the operation of company voluntary arrangements (CVAs), particularly after termination, and the payment of rent as an expense of a company’s administration in priority to other debts.

CVAs

Directors against whom claims for a misfeasance have been intimated often turn to limitation and set off in defence of a request for the repayment or restoration of the relevant sums or property.

Misfeasance and limitation

VE Vegas Investors IV LLC and others vs Shinners and others [2018] EWHC 186 Ch

Background

The applicants were creditors of VE Interactive Limited (In administration) (“VE”). VE encountered financial difficulties and its directors sought insolvency advice from insolvency practitioners at Smith and Williamson (“S&W”) and appointed them to advise on and effect a pre-pack sale of VE’s business and assets.

In the recent case of Reynard v Fox, the High Court struck out a claim brought by a litigant in person and cited the recent Supreme Court decision in Barton v Wright Hassall.

The court rejected the claimant's submission that this would be unjust because as a litigant in person, he did not have a detailed knowledge of the insolvency regulations. It ruled that the relevant regulations were not hard to find, difficult to understand or ambiguous.

Background

Key points

• The High Court struck out a claim by a liquidator who had already brought a claim arising from the same facts against the same defendants.

• The court relied on the fact that the economic benefit of pursuing the claim would accrue only to the liquidator.

The Facts

The facts

A liquidator pursued a claim against a former director of a company, that the transfer of the company’s trading inventory in satisfaction of money owed to the former director was a transaction at an undervalue and/or a preference.

An attempt was made to grant floating charge security over the inventory, which the court found was void as it was granted for existing liabilities, at a time when the company was insolvent, to a connected party.