As some may be aware, the Court of Session last year issued a Practice Note on the subject of making applications to extend the period of administration beyond the initial 12 month period.
In the first of a two-part series, Will Pearce and Gawain Moore of Herbert Smith LLP examine some of the common tools used for, and issues that arise when, restructuring premium-listed companies.
In September 2010, the Determinations Panel of the Regulator (the "DP") issued financial support directions ("FSDs") against six companies in the Lehman Brothers Group, but determined that no FSDs would be issued against 38 other companies in the group. The trustees of the Lehman Brothers Pension Scheme appealed the decision not to issue FSDs against these 38 companies to the Upper Tribunal. However, the companies applied for the trustees' appeal to be struck out.
As the prospects for business survival become ever tougher due to challenging economic conditions, administrators and liquidators are increasingly finding themselves having to justify to the courts whether or not costs should be treated as an expense of the administration or liquidation.
Sums incurred or paid as an expense of an administration or liquidation are, unlike debts incurred before the appointment of the administrator or liquidator, paid in preference to unsecured debts and also before the administrator or liquidator's fees and expenses.
Those thinking that the trials and tribulations of the recession may have passed them by and that, if all else failed, at least the pension was safe, may have to think again following two recent court decisions in which pensions came under attack from creditors and trustees in bankruptcy.
The vexed question of whether a future right to receive a pension can be attached to satisfy a judgment, or can be claimed by a trustee in bankruptcy, has long since troubled the courts.
For landlords, a tenant in administration is just about your worst nightmare. A moratorium prevents you from suing for outstanding arrears or forfeiting the lease and you may be left with an empty unit generating no income.
Now it seems if administrators are using your premises, the rent might not even be paid as an expense simply because of when they were appointed. So what has happened?
The current position is that 8 players have been reported as having objected to their contracts of employment transferring to the "new Rangers". Charles Green has apparently threatened to litigate any departing players given that, in his view, they are in breach of contract.
In Re JT Frith Limited [2012] EWHC 196 (Ch):
- the terms of an intercreditor agreement; and
- some unwitting help from the junior creditors,
enabled a senior secured lender to benefit indirectly from the prescribed part on the insolvency of its debtor.
Existing law at a glance
The Enterprise Act 2002 introduced the prescribed part under a new section 176A(2) of the Insolvency Act 1986. It reserves part of the floating charge recoveries for unsecured creditors.
Since then, the courts have held that:
At this time of year, sports pages are normally rife with transfer speculation before the new domestic seasons begin across the UK. This summer is different however, due to increased interest in Glasgow Rangers and the effect of “TUPE transfers” of players to the Rangers Newco.