Share purchase agreements often include indemnities or covenants to pay designed to protect the buyer for a period after completion where some unquantifiable liability is anticipated that will impact on the value of the company being acquired. This is particularly so in the case of unpaid tax.

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.

In our Law-Now of 4 April 2012 (click here for link), we reported on the decision of the court in the case of Leisure (Norwich) II Limited v Luminar Lava Ignite Limited (in administration).  The detailed judgment has now been released, setting out the rationale for the decision and summarising the position on rents in administration generally.

The legal position on this issue is now:

This recent decision on a jurisdictional challenge has provided greater clarity and potentially created a tortious cause of action where a debtor dissipates assets prior to judgment and subsequent freezing order.

Background

Legend International Holdings Inc (in Liquidation) v Indian Farmers Fertiliser Cooperative Limited [2016] VSCA 151

The Australian Court of Appeal refused an appeal against a winding up order made in relation to Legend in Australia where Chapter 11 proceedings were on foot in the United States.

Click here to read more...

The UK Commercial Court has dismissed the Claimant's application for a stay under Article 28 of the Judgments Regulation.

Short stories

Amendments to the Czech Insolvency Act 2016

The Court of Appeal has considered the High Court's previous refusal to lift the automatic stay imposed by Article 20 of the Cross-Border Insolvency Regulations 2006 ("Model Law").

The US Bankruptcy Court for the Southern District of New York has dismissed a case filed under Chapter 15 of the US Bankruptcy Code as the debtor's centre of main interest ("COMI") was not in the jurisdiction where the initial Liquidation was filed.

Creative Finance Ltd was incorporated in the British Virgin Islands in 1995. However the Company's main trade occurred in England, Dubai and Spain. In December 2013 the Company filed for Liquidation in the BVI, being its place of incorporation, and a Liquidator was duly appointed.

The joint liquidators of Peak Hotels & Resorts Limited ("Peak") brought an unsuccessful appeal that a legal charge held over funds paid into court ("Funds") was incapable of enforcement. The court dismissed the appeal on the basis that Peak did retain a proprietary interest over the funds.