Jurisdiction(s):
United Kingdom

Implied enforceability of floating charge; email demand sufficient; formal defects not fatal—Re The Sustainable Bathroom Company Ltd (England and Wales)

Published on: 06 September 2023

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Re The Sustainable Bathroom Company Ltd [2023] EWHC 2065 (Ch), [2023] All ER (D) 60 (Aug)

What are the practical implications of this case?

This ruling reassures appointing creditors, their professional representatives and the insurers behind them. Although the judge accepted that the director’s complaints about the creditors’ behaviour had merit, the court still held the administration appointment to be effective. Running through the judgment is the principle that debentures exist to secure indebtedness in favour of creditors, and that this substantive reality ought to trump technical imperfections of form—save, perhaps, where adherence to substance would visit serious injustice on the debtor.

What was the background?

The applicant was the founding director of a modest enterprise manufacturing electric bamboo toothbrushes supplied to Aldi. To finance the procurement of stock from China, the company entered into a funding arrangement with a financier, agreeing in return to share its profits. To enable the structure, incoming receipts were to be paid to...

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