Stevens & Bolton LLP
8 Experts
3 Contributions by Stevens & Bolton LLP Experts
PRACTICE NOTES
Duties of an office-holder to realise property
Insolvency processes (such as administration, liquidation or bankruptcy) involve appointing an insolvency office-holder whose principal duty (for a liquidator or trustee in bankruptcy) is to collect in the insolvent company’s or bankrupt individual’s assets and realise them for the ultimate benefit of creditors. Their central function is to maximise returns to creditors by turning property into cash or value as efficiently as practicable, consistent with their statutory remit. An administrator has authority to do this whilst pursuing one of the three statutory purposes of administration (see Practice Notes: Role, powers, functions and duties of an administrator, Role, powers, functions and duties of a liquidator and Role, powers, functions and duties of a trustee in bankruptcy). In this context, insurance claims—being choses in action—are property capable of realisation for the estate. This Practice Note considers the
Restructuring & Insolvency
PRACTICE NOTES
Property often constitutes part of the assets of an insolvent company to be realised by an administrator, and it is frequently crucial to a would-be purchaser wishing to keep the business operating after completion. That said, a purchaser must appreciate that acquiring a property from an insolvent company involves several notable differences, and a distinct strategy is required from that used where the company is solvent. This Practice Note identifies the principal divergences between purchasing property from a solvent company and one in administration, predominantly in the leasehold arena, though many of the observations will likewise be relevant to freehold transactions.
Difference in approach compared to a solvent seller of property
Buying from an insolvent vendor necessitates a different approach than a transaction with a solvent seller, reflecting the particular context of administration and the nature of the assets being disposed of.
Due diligence and
Restructuring & Insolvency
PRACTICE NOTES
General overview of asset sales
Whether a buyer acquires assets from a solvent owner, or from a distressed seller subject to a formal insolvency process in the asset transaction context, a range of differing legal and practical issues and considerations will arise for those involved on all sides in practice. The Insolvency Act 1986 (IA 1986) sets the rules and regulates various formal insolvency procedures affecting both corporate bodies and individuals alike in defined circumstances. In England and Wales, the principal corporate procedures are administration and liquidation in particular:
if the company is in liquidation (compulsory or voluntary) and the appointed liquidator cannot sell the business as a going concern, the liquidator will realise the insolvent company’s assets—ideally as a single job lot where feasible and appropriate, otherwise piecemeal where necessary as needed—to ultimately maximise the funds available for
Restructuring & Insolvency
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