Administrators are statutorily entitled to require a receiver to vacate office (paragraph 41 Schedule B1 Insolvency Act 1986 (“Schedule B1”)). In Promontoria (Chestnut) Ltd vCraig and another [2017] EWHC 2405 (Ch) they did just that, taking steps to remove existing receivers not long after their appointment, claiming the action to be in the interests of all the creditors. On the facts, that decision was not only unreasonable but costs were also awarded personally against the administrators.

Brief facts and arguments

In the decision in Mohammed Safier and (1) Wendy Jane Wardell & David John Standish (Joint Trustees in Bankruptcy of Mohammed Safier) (2) The Official Receiver the High Court made a potentially far-reaching decision on the payment of Secretary of State fees in certain annulment applications. Sue Austin considers the judgment.

In LRH Services Ltd (in Liquidation) v Raymond Arthur Trew (1) Jason Marcus Brewer (2) and Derek O'Neill (3) [2018] EWHC 600 (Ch), LRH Services Ltd (LRH), acting by its liquidators, brought claims for breach of duty against three former directors. The claims arose from a reorganisation in 2009. LRH did not trade but had two trading subsidiaries (R and E) and it was wholly owned by CSGH, which also had another subsidiary in addition to LRH, CSG. Two of the directors of LRH were substantial shareholders in CSGH.

The reorganisation

Toone v Robbins 2018 [EWHC] 569 (Ch)

The lessons to takeaway

Directors who are also shareholders need to be careful when arranging how to take payments from a company. For tax reasons, dividends can be perceived to be an attractive way to take cash out of a company, but if there are insufficient distributable reserves, such payments are unlawful and can be clawed back.

In light of the radically and rapidly changing face of bricks and mortar retail, cases providing guidance on the way in which liabilities are to be dealt with in the course of the restructuring / insolvency process are extremely valuable not only for stakeholders and practitioners dealing with the consequences of those processes but also to those guiding and devising the strategies in the first instance.

Wright and Rowley v Prudential Assurance Company Limited is one such case arising out of the collapse of the British Home Stores (‘BHS’) retailing group in 2016.

There is more trouble for the British High Street as Toys R Us and Maplins have both entered Administration. Toys R Us' remaining stores are due to close once stock is sold as the Administrators have been unable to find a buyer. Maplins' stores remain open for now and the Administrators are still looking to secure a buyer, but so far have been unsuccessful. New Look has announced it will be closing 60 stores, and Carpetright has announced plans to close poorly performing stores.

Following a number of corporate governance failures in situations of insolvency, the Government has published a consultation paper (located here) aimed at cracking down on directors and employers behaving irresponsibly.

With so much news coverage, it is difficult to ignore the ‘Carillion effect’. It’s hard to see how anything good can have come from Carillion’s collapse, but perhaps one positive effect is its prompt to many businesses to take a look to see if they have their own house in order.

In January this year, construction giant Carillion entered into liquidation. In a sense its demise was sudden – the firm entered straight into liquidation rather than the more familiar administration procedure, meaning it had no meaningful assets that gave any prospect of the business, or any part of it, continuing as a going concern. But in another sense it was expected: a large failure of this type had been expected by industry watchers for some time.

There is no such thing when you look at the demise of some of Britain’s biggest household names on the high street which have included BHS, Woolworths and Jessops. The latest to join the critical list are electronics retailers Maplin and Toys R Us.

Electronics chain Maplin collapsed into insolvency on last month, making it the second retailer to succumb to a brutal winter for Britain’s consumer economy in the space of just over an hour. Graham Harris, who became chief executive only last month, said: