Seafood Shack Ltd v Alan Darlow [2019] EWHC 1567 (Ch)
A lease of restaurant premises was granted to a company that did not exist; there was no legal basis for correcting the lease, and the similarly-named company claiming rights was held to have none.
The Directors of a Company that cannot pay its debts can choose to put the Company into voluntary liquidation. Indeed Directors have statutory responsibilities not to permit a Company to trade insolvently. If they allow the Company to trade insolvently they can become personally liable for the debts.
A creditor can also put a company debtor into compulsory liquidation. The amount owed must be not less than £750 and the creditor must either have an admission that the debt is owed, or a Court judgment.
On 1 November 2012, the High Court gave judgment in favour of the Special Administrators (“SAs”) of MF Global UK Ltd (“MFGUK”), in relation to a claim by MF Global Inc (“MFGI”) arising from certain repo-to-maturity transactions (the “RTM Application”). These transactions concerned the repo of European debt securities by MFGI to MFGUK, which were governed by a Global Master Repurchase Agreement (“GMRA”).
We all know how busy insolvency practitioners (IPs) were during the recession dealing with the huge rise in corporate and personal insolvencies. That is now feeding into a real spike in professional negligence claims. We briefly summarise some typical claims we are seeing and how best to handle them.
What types of claims are we seeing?
Under the Global Master Repurchase Agreement (the "GMRA"), a standard form agreement produced by The Bond Market Association and the International Securities Market Association, all of the events of default (with one exception) require both (i) the occurrence of an event and (ii) service by the non-defaulting party of a default notice on the defaulting party.
Philip Jones explains that recent cases have confirmed the need for insolvency office holders, and those appointing them, to take great care to ensure that the appointments are valid.
As was described in our article Invalid Liquidation Appointments the appointment of an insolvency office holder can be fraught with difficulties.
Bilta (UK) Ltd in liquidation) & others v Muhammad Nazir & others [30.07.12]
High Court refuses to accept that a claim by an insolvent one-man company against its director for breach of his duties would be barred by ex turpi causa.
Bilta had two directors, one of whom owned all the company’s issued shares, effectively making it a "one-man company". The directors used Bilta to perpetrate a huge VAT fraud which left the company owing £38 million to HMRC. As a result, it was placed into insolvent liquidation.
When a tenant goes into liquidation and its liquidator surrenders the lease what effect does this have on any obligations to remove any alterations that the tenant has made during the term and generally reinstate? The high court has recently decided that the terms of a surrender that released both parties from rights arising “on or after, but not before, the date of this surrender” were sufficient to release the tenant from its obligations to reinstate the premises because these obligations were future obligations.
The High Court considers the status of claims for rent in an administration in Leisure (Norwich) II Ltd v Luminar Lava Ignite Ltd (in Admin) [2012] EWHC 951 (Ch) [2012] B.C.C. 497
The problem
Introduction
In the recent High Court decision in Bilta (UK) Ltd (In liquidation) and others v Nazir and others [2012] EWHC (Ch), the court considered the application of the legal doctrine of ‘ex turpi causa non oritur actio’ in the context of fraud.