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:

In a recent case, the court held that a party to a settlement agreement (in this case a broker) cannot restrict the indemnity it is providing so that the indemnity is not payable if the insured goes into administration, or liquidation, or undergoes some other insolvency event. The decision is important on its own facts. But it does also raise questions about the legitimacy of other clauses in insurance contracts which depend on whether or not the insured or reinsured has entered into any kind of insolvency event.

A Court of Appeal decision last week has broadly upheld previous TCC guidance as to the ability of companies in liquidation or those subject to CVAs to commence and enforce adjudication proceedings against their creditors. Although theoretically possible, adjudication proceedings commenced by companies in liquidation are now liable to be restrained by a court injunction.  Adjudications by companies subject to a CVA are more likely to be appropriate and, depending on the circumstances, may be enforced without a stay of execution.

Insolvency set-off: a recap

The Court of Session has confirmed that the administration in Scotland of a Scottish company will take priority over an Indian liquidation of the same company, regardless of where the company’s business and assets are situated. The Court has also confirmed that the validity and enforceability outside the UK of a floating charge is irrelevant to the validity of an administrator’s appointment in Scotland under that floating charge.

The Facts

The case concerned an application made by the Liquidators of a BVI incorporated company, Peak Hotels and Resorts Limited ("Peak"). The application was intended to determine the effectiveness of a charge granted by Peak to Candey Limited, Peak's former solicitor.

Peak was the holding company of a joint venture vehicle that became the subject of lengthy international litigation proceedings following the breakdown of relations between the joint venture partners and shareholders. Candey acted for peak in the litigation.

The Facts

This was an appeal of a decision of Chief Registrar Baister.

Dean and Richard Robbins were directors of a company which entered Creditors Voluntary Liquidation in February 2011. Dean Robbins was the sole shareholder. It appears that the Company had somewhat basic accounting practices and did not keep detailed books and records. It transpired that, prior to entering Liquidation, the Company had paid substantial sums to the Directors in various instalments, which the Liquidators sought to recover under three separate claims.

With the news of major government contractor Carillion's liquidation, we look at the practical steps public bodies should be taking if Carillion is one of their contractors or is part of their supply chains so as to ensure there is as little disruption as possible across their service areas.

Contract review

It has been held that full and frank disclosure was not provided to the Court by a Russian Liquidator in granting a Recognition Order in the UK, which resulted in the Recognition Order being set aside. The issue was determined despite the parties being in agreement that the Liquidator's claims should be withdrawn.

The Facts

Norton Aluminium Ltd (NAL) went into Administration following a partially successful nuisance claim against it and subsequently went into Liquidation. Mr Dickinson was the managing director and controlling shareholder and brought a claim to recover a secured loan made by him to NAL. The Liquidators counterclaimed to set aside or recover compensation for various transactions, including a share buyback from Mr Dickinson and connected parties by NAL for £2.5 million and the sale of a subsidiary to Mr Dickinson for £1.