The High Court in England has made an interesting decision in the case of ED Games Limited. A director of that company procured that it did not pay VAT for a period prior to its liquidation and in that period, the net deficit on the company's balance sheet increased. The High Court has held that the director could be held personally liable for the increase in such net deficit.

Structured finance transactions frequently subordinate a swap counterparty’s rights to termination payments upon termination of a swap by reason of counterparty default. Such a provision has recently been upheld by an English court. As the case concerns the insolvency of Lehman Brothers however, the US courts must also make a decision on the same provision.  

In August 2009, an English court sanctioned the use of a scheme of arrangement to restructure the debt of IMO Car Wash Group, a highly leveraged UK based car wash company. This decision follows the similar use of schemes of arrangements in other restructurings. For example earlier this year an English court sanctioned the use of a scheme in the debt restructuring of McCarthy & Stone. In both of these restructurings, the subordinated creditors were left with no value for their debt claims.

In August 2009, an English court sanctioned the use of a scheme of arrangement to restructure the debt of IMO Car Wash Group, a highly leveraged UK based car wash company. This decision follows the similar use of schemes of arrangements in other restructurings. For example earlier this year an English court sanctioned the use of a scheme in the debt restructuring of McCarthy & Stone. In both of these restructurings, the subordinated creditors were left with no value for their debt claims.

Summary and implications

Now, more than at any other time of this economic cycle, landlords are faced with the prospect of dealing with tenants who have entered one of the various stages of insolvency and require straightforward solutions to bring their tenancy to an end. Often landlords wish to;

In its previous decision in April the First Tier Tribunal upheld the cross border group relief claims which Marks & Spencer made in respect of its Belgium and German subsidiaries after the subsidiaries had commenced liquidation. The Tribunal held further that, whereas the utilisation of the losses was to be determined by reference to local rules, the unutilised losses had to be re-computed according to UK principles for the purposes of determining the amounts which could be group relieved.

Where a landlord forfeits its lease, subject to any available relief or exemption, the landlord is liable to business rates in respect of the premises.

Empty premises business rates exemption will provide time-limited relief to a landlord who has re-entered premises. However, a landlord should be cautious of exercising its right to forfeit a lease in cases where it does not have another tenant "waiting in the wings".

The ratepayer

Business rates are paid by occupiers and, in certain circumstances, owners of premises.

In the current recession landlords are among the fi rst to lose out when a company goes into insolvency, be it a pre-pack sale or a conventional administration process. It is important, therefore, for landlords to know what rights they retain when confronted with the administration of their tenant in order to ensure the full rent is paid - if they are still entitled to it - or, at the very least, to increase their bargaining position. In this article, we look at the circumstances where an administrator is obliged to pay the landlord’s rent in full.

The administrators of Lehman Brothers International (Europe) have been intending to propose a scheme of arrangement under the English Companies Act to enable them to distribute several billions of dollars of assets held on trust by the company in the face of difficulties in establishing who was entitled to the trust assets; in particular, they had not received responses from all potentially interested clients, could not rely on the accuracy of the company's records and had not received all the information requested from sub-custodians and other intermediaries.

This week we have seen the headlines about the Focus DIY Corporate Voluntary Arrangement (CVA). It is reported that landlords have accepted the CVA and that will enable Focus to continue a significant part of the business and to retain a large number of jobs. Welcome news in many respects.

CVAs can have a significant impact on a property investment so this posting considers how CVAs work and their impact on leases?