In the Matter of System Building Services Group Limited (In Liquidation) [2020] EWHC 54 (Ch), the court confirmed that a director’s fiduciary duties continued after the appointment of an administrator or liquidator and that the subsequent purchase from the administrator/liquidator of a property at an undervalue was in breach of those duties. As a result, the property was declared to be held by the director on a constructive trust for the company.

The ferocious expansion of the shared office sector in recent years has caused a great deal of speculation about the long term viability of shared office accommodation as a business model.

In this insight, we look at how a shared office provider's insolvency might impact on its occupiers, depending on the insolvency process which is followed.

The shared office accommodation business model

This article was first published in The Commercial Litigation Journal.

The Chancellor of the High Court has published guidance on how the courts will deal with the e-filing of a “notice of appointment of an administrator” when the court is closed.

The creditor, Tall Trade Limited, claimed the first two quarterly repayments due under a loan facility agreement made in 2019 concluded with the debtor, Capital WW Investment Limited. The loan was for €17 million over a two year term. Both companies were incorporated in the BVI.

Re System Building Services Group Limited [2020] EWHC 54 (Ch)

Summary

A recent High Court ruling has considered the character and extent of directors’ duties in the context of insolvency.

In System Building Services, Insolvency and Companies Court Judge Barber (“ICCJ Barber”) considered, amongst other things, the nature of a director’s duties to a company and whether those duties survive the company’s entry into an insolvency process.

The High Court recently ruled that the general directors’ duties prescribed by sections 171-177 of the Companies Act 2006 (“CA 2006”) (the “General Duties”) continue to apply to directors after their company has entered administration or creditors’ voluntary liquidation (“CVL”). This is notwithstanding that after the appointment of an administrator or liquidator, the ability and rights of directors to control the company are legally and practically curtailed.

Background
General rule
Latest judicial guidance
Summary

A recent decision in the TCC provides the latest judicial guidance on the ability of a company in liquidation to refer a dispute to adjudication.

In a recent decision, [1], the High Court decided that it was not in the public interest to wind up a business rates mitigation scheme under its Insolvency Act powers, as it found that this scheme did not subvert the intention of insolvency law.

In what is believed to be the first case to deal with the question, any doubt as to whether the entirety of the duties owed by directors continue post administration or creditors’ voluntary liquidation (CVL) has been firmly laid to rest by the Insolvency and Companies Court’s (ICC) decision of ICC Judge Barber in Hunt (as Liquidator of Systems Building Services Group Limited) v Mitchie and Others [2020]¹.