15 November 2013

[2013] EWCA Civ 1408 

Court of Appeal (Elias, Kitchin, McCombe LJJ)

No recovery if the company has not "entered into" the transaction at an undervalue

In Re Ovenden the Court of Appeal decided that a payment made by a trustee of company money to a third party, without the company’s involvement, could not be a transaction at an undervalue under section 238 of the Insolvency Act 1986 because it was not a transaction entered into by the company.

13 November 2013

[2013] EWCA Civ 1410 

Court of Appeal (Maurice Kay VP, Beatson and Briggs LJJ)

Dismissing employees of an insolvent company: when is it unfair?

In Kavanagh v Crystal Palace, a number of employees of Crystal Palace football club claimed that they had been unfairly dismissed within the meaning of the Transfer of Undertakings (Protection of Employment) Regulations 2006 (‘TUPE 2006’).  The Court of Appeal considered the tension between TUPE 2006 and the insolvency regime.

Commercial landlords will be familiar with the practice that has grown up since the 2010 case of Goldacre of putting companies into administration immediately following a quarter day. By adopting this tactic, administrators have been able to avoid paying rent as an administration expense until the next quarter day while continuing to use the premises for the benefit of the administration.

10 September 2013

[2013] EWHC 3351 (Ch) 

Companies Court, Chancery Division (David Richards J)

Company held to be insolvent despite limited recourse stipulations

The company ARM Asset Backed Securities (“ARM”) made an application to the High Court for the appointment of provisional liquidators, having already presented a petition for just and equitable winding up.

The UK Treasury and Financial Conduct Authority (FCA) have been drip-feeding the industry rules and practical details of the transfer of consumer credit (CC) regulation to FCA. FCA has now published the final form of its detailed rules in its Consumer Credit Sourcebook (CONC), with feedback and practical advice. The rules apply from 1 April 2014 with limited grace periods only. It is critical that all firms carrying on credit-related regulated activities know what the changes mean for them.

The recent Court of Appeal decision in the Game Station case has established that administrators should pay rent on a daily basis while they are using the property. This overturns the earlier High Court decisions in the Luminar and Goldacre cases and is in keeping with the recent trend of flexibility and fairness in insolvency situations.

Leasehold property in an administration

Bristol Alliance Nominee No 1 Ltd v Bennett [2013] EWCA Civ 1626; [2013]PLSCS 316 (A/Wear UK Limited)

Background

The case relates to the insolvency of a women’s fashion retailer and their shops in Bristol and Leicester.

The Court of Appeal has decided that rent accruing during a period of administration should be treated as an expense of the administration, irrespective of the date on which it falls due for payment. Administration expenses are paid by administrators in priority to liabilities owed to holders of security.

The Court of Appeal delivered judgment on Monday morning in the much anticipated appeal in Jervis & Others v Pillar Denton & Others on the treatment of rent payable under a lease held by a corporate tenant that enters administration. The case involved the Game Administration.

Key points