Hurstwood Properties (A) Ltd and others (Respondents) v Rossendale Borough Council and another (Appellants)
The Supreme Court has delivered its keenly anticipated judgment in a case concerning the validity of two business rates mitigation schemes. The schemes under scrutiny involved property owners letting unoccupied properties to special purpose vehicles (“SPVs”) which benefitted from a business rates exemption and therefore allowed both the property owners and the SPVs to avoid liability for business rates.
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:
Summary
The much anticipated judgement of Mr Justice Snowden in relation to a restructuring plan proposal (the “Plans”) made by Virgin Active Holdings Limited, Virgin Active Limited and Virgin Active Health Clubs Limited (the “Plan Companies”) was handed down on 12 May 2021.
Landlords have lost round two in the ongoing battle as to whether rent should be paid as an expense of the administration. The decision of the Court last week in the X-Leisure / Luminar case was in favour of administrators.
Following the Goldacre case, if an administrator is using the property for the purposes of the administration on the quarter day then the full quarter’s rent is payable as an expense of the administration. What was not clear, was whether if the administrator was appointed just after the quarter day rent was payable as an expense.
The much anticipated judgement of Mr Justice Snowden in relation to a restructuring plan proposal (the “Plans”) made by Virgin Active Holdings Limited, Virgin Active Limited and Virgin Active Health Clubs Limited (the “Plan Companies”) was handed down on 12 May 2021.
Despite the scale of the pandemic and resulting build-up of Covid related rent arrears, currently estimated at around £4.5bn, business restructuring has been relatively muted. This is partly explained by the moratorium on forfeiture and other restrictions on landlords’ remedies, combined with unprecedented government financial support for struggling businesses.
But rent arrears cannot be pushed down the track indefinitely. As restrictions are eased and focus turns to tackling this debt, business restructuring activity will no doubt intensify.
The government recently published its Corporate Insolvency and Governance Bill which includes a temporary “ban” on statutory demands. In its current form, the ban will prevent landlords and other creditors from relying on statutory demands served between 1 March and 1 month after the Bill becomes law. The Bill also includes provision to prevent the winding up of companies where their inability to pay is due to Covid 19.
1.Why use an electronic signature?
2.What is e-signing?
3.Is e-signing valid?
4.What types of document can be signed electronically?
5. Are there any restrictions/protocols relating to electronic signatures?
6. What is the position with overseas entities?
7. E-signing with a secure platform
8. E-signing without a secure platform
Why use an electronic signature?
Last September we reported on the Court’s decision on the landlords’ challenge to the Debenhams CVA on grounds of unfair prejudice and material irregularity, in respect of which the landlords have now successfully obtained permission to appeal on various grounds (see below).
Judge Barber has considered the order of priority of payments in an administration and - more specifically - whether the Lundy Granite principle applies to both the rent payable once a company has gone into administration, and to the “top up” obligation requiring the company to replenish a rent deposit, where a landlord had drawn down on the deposit against unpaid rent (Re London Bridge Entertainment Partners LLP (in administration) [2019] EWHC 2932 (CH)).
The Rules