The statutory moratorium may not protect a company in administration against proceedings continuing under the Landlord and Tenant Act 1954

Property professionals will no doubt be familiar with the statutory moratorium that comes into effect immediately upon an administration order being made in respect of a company. The main effect of this is that no legal process may be started or continued against the company or property of the company except with the consent of the administrator or with the permission of the court.

The background

The High Court in England has made an interesting decision in the case of ED Games Limited. A director of that company procured that it did not pay VAT for a period prior to its liquidation and in that period, the net deficit on the company's balance sheet increased. The High Court has held that the director could be held personally liable for the increase in such net deficit.

Introduction

The High Court1 in England has confirmed the validity under English law of contractual provisions common in structured finance transactions which subordinate payments to a swap counterparty in circumstances where the swap counterparty has defaulted on its obligations under the terms of the relevant swap agreement.

The Judgment

Parties

The making of a bankruptcy order alone will not deprive a judgment creditor of a final charging order where it is obtained before the bankruptcy order is made.

This week we have seen the headlines about the Focus DIY Corporate Voluntary Arrangement (CVA). It is reported that landlords have accepted the CVA and that will enable Focus to continue a significant part of the business and to retain a large number of jobs. Welcome news in many respects.

CVAs can have a significant impact on a property investment so this posting considers how CVAs work and their impact on leases?

Implementation of the Bankruptcy and Diligence etc (Scotland) Act 2007 continues apace. 22 April 2009 saw the most recent instalment with the passing of Commencement Order NO.4 including Parts 5 and 10 of the Act: namely the parts relating to inhibition, arrestments in execution and actions of furthcoming.

Part 5 - Inhibition

In the case of William Hare Ltd v Shepherd Construction Ltd [2009] EWHC 1603 (TCC) (25 June 2009), the court declined to incorporate amendments made to an Act before the contract was signed which were not specifically referred to in the contract.

The facts

InDornoch Ltd & Ors v Westminster International & Ors [2009] EWHC 1782 (Admiralty) Mr Justice Tomlinson held that the sale by Westminster International (Westminster) of the wreck of a vessel, the Fariway for the sum of 1000 Euros to a related company was a transaction at an undervalue under s423 of the Insolvency Act 1986 (which, in basic terms, provides that certain disposals made to connected persons for a value less than a fair value may be set aside by the court).

The draft Legislative Reform (Insolvency) (Miscellaneous Provisions) Order 2009 has now been published detailing the proposed changes to the Insolvency Act 1986. The aim of the changes is to reduce costs and the administrative burden on users of the legislation and subsequently benefi t the creditors of insolvent companies and individuals through more fl exible procedures and increased dividends.  

Administrations are still on the rise and our high streets, retail parks and shopping centres are changing appearance as units lie empty. You may not have heard the term ‘pre-packs’ but it could become an option for retailers to help overcome this depressing trend.  

In this edition of Retail Matters we have pulled together the facts about pre-packs, the pros and cons and an outline of the ways in which insolvency practitioners and other professional bodies are aiming to ensure that the procedure is not abused.  

What is a pre-pack?