What happens if one party to a contract fails to perform? Can the innocent party get all of its losses back? What happens if the losses are difficult to prove?
Here, we look at what you can claim and how to protect your position.
The general rule
Damages for breach of contract are usually intended to compensate the injured party for its losses arising naturally from the breach or which were within the parties' contemplation when the contract was made.
- Introduction
Most reading this will know that freezing orders are granted to prohibit defendants from disposing of or dissipating their assets in a way that will prevent the claimant from enforcing any judgment he obtains. If the defendant disobeys, he is at risk of contempt. But the primary purpose of contempt is to punish the defendant. Many claimants will simply be concerned to ensure that the defendant’s money is frozen.
In relation to insolvent liquidations under U.K. law, one of the primary objectives will be the implementation of an efficient process to preserve and recover assets for the benefit of the creditors. This is particularly so where there is a need to instigate costly litigation or cross-border recognition proceedings and where the liquidator will want increased assurances as to the likelihood that those steps will generate positive returns.
The administrator who is running off the business of English (re)insurer GLOBAL General & Reinsurance Company Ltd filed a petition under Chapter 15 of the United States Bankruptcy Code with the federal bankruptcy court in Manhattan yesterday. The petition asks for the court's assistance with the last of four Schemes of Arrangement for GLOBAL, which was sanctioned by the High Court of Justice for England & Wales on January 28, 2011.
On 21 May 2010, Justice Floyd handed down his judgment in Bloomsbury International Ltd (in administration) v Mark Alan Holyoake.1 The case sheds light on the circumstances in which it is appropriate for a cross-undertaking provided by administrators on behalf of an insolvent company to be fortifi ed by a bank guarantee.
Facts
THE PERENNIAL PROBLEM OF UNPAID DEBTS – YOUR RECOVERY OPTIONS
The High Court has ruled in the case of Goldacre (Offices) Limited v Nortel Networks UK Limited (in administration) [2009] that rent for premises that continue to be used for the beneficial outcome of an administration must be paid as an expense of the administration. This decision confirms that the court has no discretion in these circumstances and that it does not matter if only part of the premises are being used. This contrasts with the position where a landlord wishes to take action against a tenant in administration such as bringing forfeiture or injunction proceedings.
This is the third of a series of four e-bulletins in relation to administrations and company voluntary arrangements (CVAs).
Although service of a statutory demand or winding-up petition on a company is a blunt and unsophisticated debt recovery tool, it will often have the desired effect for a creditor as they are seldom ignored and ignored only at the company's peril. It can often prompt payment of the sum due, or judgment owed, where previously there has been prevarication and empty promises of payment.
Here is a reminder of some important issues a (solvent) company should consider if a statutory demand or petition is served upon it.
Doing nothing is not an option
In DHL GBS (UK) Ltd v Fallimento Finmatica Spa – Butterworths Law Direct 20.2.09 the Commercial Court gave its first decision on the issues dealt with by the ECJ in the Front Comor.