Corporate and commercial | 01 February 2015

In April 2014, the pan-European car park operator, Apcoa, obtained the sanction of the High Court in England to a set of schemes of Arrangement under Part 26 of the Companies Act1. With the group’s finances under pressure, this step was taken purely in order to extend the term of its loan facilities. In September, Apcoa, by its German holding company and eight operating subsidiaries registered variously in Germany, Austria, Belgium, Denmark, the United Kingdom and Norway, returned to the High Court in London with separate applications for a further set of inter-conditional schemes, intended to facilitate the restructuring of the group’s finance facilities. Judgment was given by Hildyard J in the High Court. He gave detailed reasons for his decision to allow the companies to call meetings of creditors and for his subsequent decision (at the sanctions hearing in October) to make orders sanctioning the schemes2. Before the first set of schemes, Apcoa’s senior lenders had agreed to a change in the governing law of the group’s facilities from German law to English law for the specific purpose of creating ‘a sufficient connection’ with the English jurisdiction, allowing the English court to take jurisdiction and sanction the schemes.
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Finance | 01 December 2014

As daily news heralds the emergence of the British economy from the worst recession since the 1930s it may seem a strange time to suggest that companies should consider acquiring businesses from companies which go into an insolvency process.

However, looking back at past recessions shows that, apart from a spike of insolvencies when the recession first bites, the peak of insolvencies occurs a surprisingly long time after the economy has returned to growth. For example, the global recession is the early 1980s ended in the UK at the beginning of 1981 but the peak of company failures did not occur until 1985. Similarly, the UK economy technically emerged from a recession in the third quarter of 1991 but corporate insolvencies did not peak until the end of 1992. [Continue Reading]

Finance | 01 September 2014

A scheme of arrangement under Part 26 of the Companies Act 2006 is a court-driven process that permits a restructuring on the basis that the requisite majority, by number and value, of the insolvent company’s creditors (or any class of them) vote in favour of it. Where there are different classes of creditors, the company will have to identify these classes in its first application to court seeking permission to convene and hold the meetings. The results of the voting at the statutory creditors’ meetings have to be formally reported to the court at a final hearing seeking the court’s order sanctioning the scheme. [Continue Reading]

Finance | 01 June 2014

For a long time the issue of rent payable by a corporate tenant in administration appeared to be settled1. Landlords were apparently content to accept that, when a tenant company went into administration, the rent owing under the lease at the date of the administration was an ordinary unsecured claim. For the period of the administrators’ occupation and use of the premises they would pay the rent reserved by the lease apportioned on a daily basis as an expense in the administration. This established approach to rent in administration has come to be known as the ‘flexible’ or ‘pay as you go’ approach and was given judicial approval in the early 1990s in the leading case of Re Atlantic Computers Systems Plc (No 2) [1990]. [Continue Reading]

Finance | 01 April 2014

An important decision of the Court of Appeal in November 2013 has overturned the decision of the Employment Appeal Tribunal in the case of employees made redundant by the administrator of a football club prior to its sale. The decision is relevant to purchasers of business and assets from companies in administration. The club was Crystal Palace FC, then owned by a company called Crystal Palace FC (2000) Ltd. The relevant events took place at the end of the 2009/10 football season when the club was near the bottom of the Championship and struggling with severe financial difficulties.

The case concerns the question whether the dismissal of four employees was unfair under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE). As explained below, the effect of the changes to TUPE as from 31 January 2014 is unlikely to alter the significance of this decision.
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Corporate & Commercial | 01 March 2014

Retention of title clauses are found in most contracts for sale of goods. The concept of retention is a simple one whereby the supplier of goods protects itself against non-payment by retaining ownership of goods until payment is received from the customer.

The concept arises from the Sale of Goods Act 1979. The Sale of Goods Act provides that property in goods will only pass when the parties to the transaction intend it to pass, thus allowing a supplier to retain title to goods after delivery of those goods to the customer. [Continue Reading]

Finance | 01 December 2013

Pre-pack sales by administrators are now used frequently enough for most people in business to be aware of them and many have come across them in their business lives. A small amount of controversy still attaches to pre-packs, but it is probably right to say that they are now an accepted part of the UK business scene as a useful means of rescuing a business in difficulty and preserving some or all of the jobs connected with the business.

SIP161, the guidelines for insolvency practitioners carrying out a pre-pack sale, issued in 2009 by the Association of Business Recovery Professionals (and commissioned by the Joint Insolvency Committee (JIC)2) have been revised. The revised guidelines took effect from 1 November 2013. The revised SIP16 defines a pre-pack sale as follows: [Continue Reading]

Corporate and commercial | 01 October 2013

If a tenant of commercial property does not pay its rent as it falls due one of the most effective remedies for a landlord has been to exercise Distress – the common law right to recover rent arrears by seizing and selling a tenant’s goods. That right is soon to be abolished and replaced with a new system of commercial rent arrears recovery (CRAR). 
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Public Sector | 01 July 2013

The EC regulation on insolvency proceedings1 (the Regulation) was introduced as a directive taking effect in the laws of member states of the European Union, without the need for member states to pass any local law of implementation. It has been part of EU law and the law of the United Kingdom since 31 May 2002. Insolvency laws vary across the member states of the EU, so a framework was needed to allow the patchwork of differing local laws to interact as efficiently as possible. The Regulation applies in all the member states of the EU, except Denmark, which exercised its right to opt out. [Continue Reading]

Insurance | 01 May 2013

An important area of insolvency law – the liability of a company in administration to pay the rent under the lease of its premises – which until recently had been relatively clear and straight forward, is currently in an unsatisfactory state. This was not always the case, as, until quite recently, landlords and administrators could easily assess where they stood under the flexible approach that prevailed for many years. Unfortunately, as occasionally happens with insolvency law in the UK, a relatively minor change in the law leads to a re-examination of the position. The matter comes before the court, which feels constrained to interpret the law in a way 
that leads to an impractical result. There then follows a clamour for a change to the law. It is a pattern that we have seen several times before. 
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