Jonathon Crook of Shoosmiths discusses the recent decision of the Court of Appeal in Secretary of State for Business Enterprise and Industrial Strategy v PAG Asset Preservation Limited in which the Court of Appeal dismissed a public interest challenge to a scheme for the mitigation of business rates on empty property and where he acted for the successful companies.
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LEGISLATION
CORPORATE INSOLVENCY AND GOVERNANCE ACT RECEIVES ROYAL ASSENT
The Corporate Insolvency and Governance Act 2020 received Royal Assent on 25 June 2020. As reported in our last Update, the Act brings in some major changes to the insolvency regime which are potentially relevant to scheme trustees seeking to enforce their rights against sponsoring employers, in particular:
“Unfair discrimination is rough justice.
Ford (Administrator), in the matter of The PAS Group Ltd (Administrators Appointed) v Scentre Management Ltd [2020] FCA 1023
Factual background
Facts
Centenary Homes Limited (C) was a property development company which acquired two blocks of flats: one in Enfield and the other in Bloomsbury. The Bank of Scotland (BOS) extended secured finance to C for the development of the two properties.
C defaulted on its repayment obligations in 2012 and fixed charge receivers were appointed in March, when the balance outstanding was approximately £4.4 million.
The receivers were able to sell the Enfield flats in July 2012, for £3,250,000.
The case of Re Lehman Brothers Europe Ltd (In Administration)[2020] EWHC 1369 (Ch) in May 2020 highlighted the importance of ensuring that creditors or the creditors committee approve the discharge of Administrators’ liability pursuant to paragraph 98 of Schedule B1 to the Insolvency Act 1986.
Commercial landlords are exposed to a range of risks from the economic and social consequences of the COVID-19 pandemic. One new risk to be confronted will come from the increased prevalence of rental deferrals and interaction with the Australian insolvency regime over ‘unfair preferences’.
Why is rent ‘protected’ in normal trading conditions?
On August 11, 2020, the United States Court of Appeals for the Second Circuit affirmed lower court decisions rejecting Lehman Brothers Special Financing Inc.’s (“LBSF”) attempt to recover nearly $1 billion in payments to noteholders and enforcing certain Priority Provisions (defined below) that subordinated payments otherwise payable to LBSF under related swap transactions.
On 30 July 2020, the Insolvency, Restructuring and Dissolution Act 2018 (IRDA) came into operation. The IRDA is an omnibus legislation housing all of Singapore’s insolvency and restructuring laws in one single piece of legislation.
The general framework of the IRDA has been discussed in the first article in our series of articles covering the various aspects of IRDA and can be found here.
Recently, in In re Tribune Company, the Third Circuit affirmed that the Bankruptcy Code means exactly what it says and that the enforcement of subordination agreements can be abridged when cramming down confirmation of a chapter 11 plan over a rejecting class entitled to the benefit of the subordination agreement, so long as doing so does not “unfairly discriminate” against the rejecting class (and the other requirements for a cramdown are satisfied).