On June 22, creditors of House of Fraser will vote on CVA proposals in the culmination of a bid to restructure the retailer which has hit headlines in both property and mainstream news. The proposals would see 31 of House of Fraser's 59 stores closed, and a 25% rent reduction in respect of a further 10.

The Facts

This was an appeal of a decision of Chief Registrar Baister.

Dean and Richard Robbins were directors of a company which entered Creditors Voluntary Liquidation in February 2011. Dean Robbins was the sole shareholder. It appears that the Company had somewhat basic accounting practices and did not keep detailed books and records. It transpired that, prior to entering Liquidation, the Company had paid substantial sums to the Directors in various instalments, which the Liquidators sought to recover under three separate claims.

Cambridge Analytica, the data analytics firm at the centre of the Facebook data scandal, is closing its doors and commencing insolvency proceedings. The company has been unable to recover from the bad press coverage and large legal fees in dealing with the aftermath of the Facebook data breach allegations.

David Pomeroy, partner and head of the restructuring and insolvency team at Bristol law firm Ashfords, shares his thoughts on how the city's high streets will need to evolve in order to survive

Every week we see a report of another major high street retailer on the brink. Mothercare is the latest to announce restructure plans and RBS has announced the closure of many of its high street branches, including Clifton.

They follow hot on the heels of brand names such as Jamie’s Italian, Maplin, Toys R Us, Byron, Prezzo and New Look closing or scaling back.

In the wake of the Carillion insolvency and the Toys R Us administration, there are contrasting tales from two different UK businesses.

The engineering business Rolls-Royce is going against the trend and has announced that it will keep its defined benefits pension scheme open for current members until January 2024.

The scheme is running at a £1.4 billion surplus, which will also allow the company to decrease its contributions to its defined benefit retirement fund by £145 million over the next three years.

Judge Martin Glenn granted recognition to a UK scheme of arrangement with third-party releases that lacked full creditor consent. In re Avanti Communs. Grp., PLC, No. 18-10458, 2018 Bankr. LEXIS 1078 (Bankr. S.D.N.Y. Apr. 9, 2018). While stating that “granting third-party releases in chapter 11 cases is controversial,” Judge Glenn noted that courts will more willingly enforce third-party releases in chapter 15 cases, given the importance of comity and respect for foreign proceedings.

In May 2018, Mothercare and Carluccio's became the latest in an increasingly long line of high street names to propose Company Voluntary Arrangements (CVAs) involving significant site closures and rent reductions. On 31 May, 91% of unsecured creditors approved the Carluccio's CVA, and the following day Mothercare's creditors followed suit (although that was not the case with all of its subsidiaries, as discussed below). Next in line according to recent reports are House of Fraser and then Homebase, following the latter's acquisition for £1 by retail restructuring specialists Hilco.

In this recent judgment, the court considered the extent of an administrator's duties and when an administrator could be considered an agent to a secured lender.

The issues considered by the Court

The court explored the nature of the administrator's duties in relation to the conduct of the administration, the decision of which selling agents to appoint and the sale of the secured asset.

​We consider the implications of the Work and Pensions and BEIS Committees’ report into Carillion, which highlights a lack of “meaningful competition” in the statutory audit market and recommends a reference to the Competition and Markets Authority.

Summary

Claims remain frequent in the construction industry, and so do insolvencies. In the wake of main contractor Carillion’s entry into liquidation, and rumours of forthcoming interest rate rises, it is worth looking at what effect different types of insolvency have on the ability to prosecute claims.