Winding-up priority order meaning

Banking & Finance—October 2024 case round-up Brierley v Otuo and others [2024] EWHC 2549 (Ch) — Security: cost recovery on legal mortgages The court refused the mortgagee’s appeal against a 28 July 2023 order that barred recovery of sale and enforcement costs on specified properties. The decision followed the established rule on legal mortgages set out in Fisher & Lightwood’s Law of Mortgage (paragraph 55.6). Put simply, unless the mortgage contains an express term, there is no implied duty on the mortgagor to pay the mortgagee’s costs, charges and expenses, so they cannot be recovered from the mortgagor personally, save where personal liability has arisen in the particular case. Nevertheless, those costs are rolled into the secured indebtedness and, as against the mortgagor and anyone with an interest in the equity of redemption, they are treated as part of the amount owing under the security and must be satisfied as a condition of redemption......

In this issue: Local government reorganisation Public procurement Planning Social housing Adult social care Children’s social care Education Governance Local government finance Healthcare Highways Environmental law and climate change Daily and weekly news alerts New and updated content Local government reorganisation MHCLG publishes decisions on local government reorganisation The Ministry of Housing, Communities and Local Government (MHCLG) has issued an update letter confirming that no determination has yet been reached on proposals for local government reorganisation in East Sussex and Brighton and Hove, with further assessment ongoing before arrangements are finalised. MHCLG has also released consultation findings and letters confirming implementation in devolution priority areas to create: five unitary councils in Essex, Southend-on-Sea and Thurrock, five unitary councils (option 1A) in Hampshire, Isle of Wight, Portsmouth and Southampton, and three unitary councils in each of Norfolk and Suffolk. Council...

Re Avanti Communications Ltd [2023] EWHC 940 (Ch) This marks the first substantial judgment on the divide between fixed and floating charges since the House of Lords’ landmark ruling in Re Spectrum Plus [2005] UKHL 41, which reclassified an apparent fixed charge over book debts as floating because the chargor could freely deploy the charged assets and the security holder therefore lacked the requisite control to constitute a fixed charge. The designation of security as ‘fixed’ or ‘floating’ under English law now carries even greater weight given HMRC (the UK tax authority) ranks as a preferential creditor for certain taxes in insolvency—ie those taxes sit behind fixed charge realisations but ahead of floating charge realisations. That characterisation had a decisive effect on the order of payments in Avanti’s administration: as the charge was properly treated as fixed, the secured creditors recovered in full; had it instead been treated as floating, part of the proceeds would have been payable to HMRC (as preferential creditor) and to unsecured creditors up to...

Liquidation Following enforcement of security by fixed charge creditors for their own benefit, the order of distributions in a winding up is: if liquidation commences within 12 weeks of a moratorium, any unpaid moratorium debts and ‘priority pre‑moratorium debts’ to which no payment holiday applied during the moratorium expenses properly incurred in the winding up (including the liquidator’s remuneration) ordinary preferential debts secondary preferential debts the prescribed part for unsecured creditors (where not disapplied) debts secured by floating charges unsecured debts statutory interest postponed debts (i.e. non‑provable liabilities) return of any surplus to members (subject to adjustment between members) For further details, see Practice Note: Waterfall of payments in liquidation...

THIS PRACTICE NOTE APPLIES TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES Where a defined benefit occupational pension scheme is underfunded and proceeds to wind up, trustees are required to secure members’ entitlements by allocating the scheme’s assets to its liabilities in line with the statutory priority order in section 73 of the Pensions Act 1995. That statutory order takes precedence over any priority provisions in the scheme’s own rules. Since its introduction on 6 April 1997, the priority framework has been revised several times and depends on the date winding up commenced. The version currently in force, as set out in section 73 of the Pensions Act 1995, applies to schemes whose winding up started on or after 6 April 2005. Schemes that began winding up before 6 April 2005 must refer to earlier legislative versions to ensure the correct order is followed. A different statutory priority order applies to schemes that started winding up: between 10 May 2004 and 5 April 2005 inclusive between 6...

Loan market and developments Provide a concise outline of the present condition of the loan markets in your jurisdiction and any notable recent shifts. Bank lending facilities remain the principal source of finance for small and medium-sized enterprises (Petites et Moyennes Entreprises) and mid-cap businesses (Entreprises de Tailles Intermédiaires). That said, these companies increasingly seek to broaden their funding mix to avoid overreliance on bank borrowing and to secure instruments with longer maturities. Corporates are turning more frequently to bond issuance, in particular via unirate loan structures, which deliver a single tranche blending senior and mezzanine debt under one credit line taken up by a private fund. The chief obstacle to widening funding channels lies in the French banking monopoly restrictions described below. This ongoing shift aims to balance liquidity needs, reduce concentration risk with lenders, and align funding horizons with strategic plans, yet remains shaped by domestic regulatory boundaries too. Provide a concise summary of impending legal changes or other issues that could influence the loan markets or...

Parties [ Name of company in administration or liquidation ] (in [ administration OR liquidation ]) (the Company), with its address at [ Company’s address ], acting by [ [ individual's name ], in his capacity as [ Administrator OR Liquidator ] of [ the Company ], of [ Company’s address or Office-Holder’s address (if different) ] (the Office-Holder) OR [ individual's name ], in his capacity as [ Administrator OR Liquidator ] of [ name of company in administration or liquidation ] (in [ administration OR liquidation ]) (the Company), of [ Company’s address or Office-Holder’s address (if different) ] (the Office-Holder) ] [ creditor's name ] of [ creditor’s address ] (the Creditor) Recitals [ On [ date ], the court made a winding-up order against the Company following the petition of [ name of the petitioner ] presented to the court on [ date ] OR On [ date ], the Company went into administration ] ...