As previously described in our Alert of Oct.
On 1 May 2009, the administrators of Lehman Brothers International (Europe) ("LBIE") applied to the English High Court for directions on certain issues relating to "Client Money" (as defined in the UK Financial Services Authority's Client Assets Rules, the "CASS Rules") held by LBIE. LBIE was regulated by the FSA and was required to comply with the CASS Rules.
In a recent interesting Scottish case, HSBC Bank plc, Re an Order to wind up Kirkbride Investment Limited [2009 Scot CS CSOH 147], the Court of Session granted an application to wind up an overseas company and appoint Joint Provisional Liquidators. The company, registered in Gibraltar, was involved in property development in Scotland with the secured lending provided by the Bank.
The Facts
The FSA has released a further update on Keydata Investment Services Limited. The update reads as follows:
"On 18 November 2009 the Luxembourg financial services regulator, the Commission de Surveillance du Secteur Financier (the CSSF) applied to the Luxembourg court for Eric Collard of KPMG ADVISORY s.a.r.l to be appointed as administrateur provisoire (provisional administrator) of Lifemark S.A. (Lifemark).
Company Administrations in the UK are still on the rise. An administration is the nearest UK equivalent of a US Chapter 11 procedure or an Insolvenzplan in Germany. You may not have heard the term ‘pre-packs’ but if you become involved with any struggling business in the UK, be it your own or that of a customer, supplier or a tenant, you should know what you are up against.
Scottish Lion Insurance Company is attempting for the second time to promote a solvent scheme of arrangement to bring its insurance business to an early close. The first attempt was abandoned in 2005 when the company was ordered by the Scottish Court to disclose to one objecting creditor a list of all its scheme creditors, whereupon the proposed scheme was withdrawn.
1. Can I lock the tenant out of the property until they pay?
No. If a tenant has been placed in administration then there will be a moratorium in place. This gives a company some breathing space. Rights against the company, such as forfeiture or conducting legal proceedings, can only be pursued with either the consent of the administrator or a court order. As noted last week, changing the locks is likely to forfeit the lease. Unless you intend to forfeit and obtain the necessary permission to do so, you should not change the locks.
In the last edition of Real Estate Update, we considered the position of a landlord wishing to keep the lease of premises to a company in administration ongoing and in what circumstances he will receive the full rent (ie 100 pence in the pound). If, however, the tenant is in administration and the landlord would like to bring the lease to an end, he would only be entitled to forfeit the lease if the administrator consents or the court grants an order giving him permission to do so.1
Today, the U.K. Treasury and Northern Rock plc separatelyannounced that the restructuring of Northern Rock will take place on January 1, 2010 (Transfer Date).
The Third Parties (Rights Against Insurers) Bill proposes that claimants should be able to sue the insolvent defendant’s insurer directly without having to sue the wrongdoer first. This changes the current legislation, passed in 1930, that requires claimants to establish the wrongdoer’s liability before bringing a separate claim against their insurer.