Key points

• In order to rescind a winding up order the court must be satisfied that the circumstances of the case are materially different to those before the court that made the winding up order.
• A stay of a winding up order would not be made as an alternative route was available. 

Facts

Key points

• Section 306 of the Insolvency Act 1986 (“1986 Act”) provides that a bankrupt’s estate shall vest immediately in the trustee in bankruptcy and no registration is required to effect that vesting;
• A bankrupt’s tenancy had vested in the trustee so that the bankrupt was no longer the qualifying tenant for the purposes of enfranchisement under the Leasehold Reform Act 1967 (“1967 Act”).

The facts

Following the Court of Appeal’s decision in Game it is necessary to consider the effect of the court’s decision on the treatment of rents in administration and by analogy liquidation – and the potential consequences of that change.

What types of insolvency does the decision affect?

The Court of Appeal’s decision explicitly states that it is applicable as to the treatment of rents in both administration and liquidation.

What about existing cases?

In Re Parmeko Holdings Limited the Court had to consider whether to give directions to Administrators where creditors had failed to vote on their proposals. The Court also considered the terms of Administrators’ standard proposals.

In Re Parmeko the proposals provided for the Administrators to:-

• Continue to manage the company’s business and affairs in accordance with the statutory purposes;
• Make payments to secured / preferential creditors;
• Seek one of various exit routes;

And for

18 December 2013

[2013] EWCA Civ 1626

Court of Appeal (Rimer, Kitchin, Christopher Clarke LJJ)

Whether landlords' rights to seek specific performance of an agreement to surrender leases survived an intervening insolvency

16 December 2013

[2013] EWHC 4287 (Comm)

Commercial Court, Queen's Bench Division (Burton J)

Foreign trustee-in-bankruptcy personally liable for costs of restraining foreign insolvency proceedings, on an indemnity basis

The UK Court of Appeal has swept aside existing rules governing when administrators have to pay advance rents falling due before their appointment.

In what will be seen as a significant victory for landlords, the Court held on 24 February 2014 that it was not open for administrators to enjoy a rent free period simply because they were appointed just after a quarter day.  The decision will have major implications for the planning and implementation of corporate insolvencies and looks set to transform the relationship between insolvency practitioners and the property industry.

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.