Legal News

What are the practical implications of this case? Here, the applicant, Ms Vorotyntseva, applied for, and the High Court made, freezing orders over cryptocurrency ( Bitcoin and Ethereum) against a trading platform, Money-4 Limited (trading as Nebeus.com) ( Nebeus), with its directors. Practitioners will note the judge’s rigorous scrutiny of the technical material. Birss J held that, of two screenshots adduced, one did not show the platform still retained Ms Vorotyntseva’s Bitcoin, while the other (examined in hard copy and on an i Pad) seemed to have been manipulated so it looked as though Ms Vorotyntseva’s name appeared on a screenshot when it did not. Accordingly, Birss J had no hesitation in finding a real risk of dissipation. Crucially, the matter proceeded on the footing that cryptocurrency constitutes property. In particular, there was no disagreement that the...

Dickinson v Nal Realisations ( Staffordshire) Ltd [2019] EWCA Civ 2146, [2019] All ER ( D) 25 ( Dec) What are the practical implications of the judgment? This ruling yields three principal takeaways, mirroring the questions the Court of Appeal was required to resolve. To begin, the Court of Appeal determined that CA 2006, s 1157—which permits judicial relief for directors from liability ‘in proceedings for negligence, default, breach of duty or breach of trust’ where they have acted honestly and reasonably—can, at least in principle, also be invoked in a claim seeking the return of company assets transferred without authority. That is the decision’s most consequential aspect. It broadens the protective reach of s 1157 to encompass proprietary causes of action. Accordingly, directors can seek relief where, for instance, they have moved company property to themselves under an honest and...

Re Moss Groundworks Ltd [2019] EWHC 3079 ( Ch) (10 September 2019), [2019] All ER ( D) 91 ( Sep) What are the practical implications of this case? The court will not entertain an administration application designed to enable a pre-pack sale to existing management where the evidential foundation is so weak that it triggers reasonable doubts about the propriety of the pre-pack. It will be an uncommon instance in which the court proceeds where, as occurred here at an initial hearing before Snowden J, the supporting material falls markedly short. In particular, the court was not satisfied because: there was a pronounced disparity between the apparent value of book debts and work in progress and the consideration being offered for those assets; the marketing of the business appeared to have been extremely truncated; and, on its face, the marketing was not only abbreviated but also...

Re London Bridge Entertainment Partners illustrates how choices that appear trivial in solvency can become pivotal on insolvency. In this instance, opting to ‘pay first, query later’ from the rent deposit meant the landlord effectively relinquished the priority it might otherwise have enjoyed for those rent sums. The judgment also confirms that the scope of provable debts is interpreted broadly, whereas the category of administration expenses is construed narrowly. Written by Samuel Parsons, barrister at Guildhall Chambers. Re London Bridge Entertainment Partners LLP (in administration) [2019] EWHC 2932 ( Ch), [2019] All ER ( D) 96 ( Nov) What are the practical implications of this case? This decision underscores the caution required when a commercial counterparty cannot pay. It was common ground that, had the rent for the period of the administrators’ beneficial retention remained outstanding, it would have constituted an expense of the...

Promontoria ( Henrico) Ltd v Jeavons and another [2019] Lexis Citation 396 What are the practical implications of this case? There is an expectation that courts will avoid an expansive reading of CCA 1974, s 140A. The statute affords judges considerable latitude when evaluating the character of relationships; it does not set out specific factors for them to consider. In this matter, the judge declined to find unfairness. He determined that the loan facility offer’s terms and conditions made it plain that the defendants were required to satisfy themselves that the facilities were appropriate for their purposes and that they......

Re JPF Clarke ( Construction) Limited (in a company voluntary arrangement); Maze Inns Ltd (in liquidation) and others v Hunt and others [2019] Lexis Citation 379 What are the practical implications of this case? It is vital that creditors substantiate the amounts set out in their proofs of debt, whether those proofs are to be assessed by an insolvency practitioner ( IP)—who performs a quasi-judicial function—or by the court on a challenge to an IP’s decision. Providing adequate evidence to the IP at the outset may remove the need to contest an allegedly erroneous determination in court. In many situations, the relevant events occurred years before the point when a creditor must persuade an IP or the court of an insolvent company’s liability, and the quantum of that liability. Accordingly, contemporaneous records are generally the most persuasive material, and clients should be...

What are the practical implications of this case? As with the rulings at first instance and on appeal, there are likely to be consequences in both the political and legal arenas. Politically, the judgment heaps considerable pressure on the PM and the government. This is an extraordinary ruling by the Supreme Court. The court concluded that the PM acted unlawfully and without adequate justification, preventing Parliament from fulfilling its constitutional roles both as a legislature and as the body tasked with holding the executive to account. It is difficult to characterise this outcome as anything other than an embarrassment for the PM. It amounts to a serious censure and, in the circumstances, it is unsurprising that there are already calls for the PM to ‘consider his position’. Parliament has been......

Discovery ( Northampton) Ltd and others v Debenhams Retail Ltd and others [2019] EWHC 2441 ( Ch), [2019] All ER ( D) 67 ( Sep) What are the practical implications of this case? Debenhams’ restructuring proceeds, with the CVA surviving strong landlord objections. The judgment offers useful clarification on CVAs: future rent liabilities can be compromised within a CVA reducing future rent under a CVA does not automatically make it unfair; the court evaluates the proposal in the round a CVA cannot alter a landlord’s right of re-entry What was the background? Six landlords brought a challenge to Debenhams’ CVA under section 6(1) of the Insolvency Act 1986 ( IA 1986). Their leases were for 30 years, with automatic rent increases for the first ten years, followed by five-yearly upwards-only reviews. Debenhams’ directors advanced the CVA to tackle...

What are the practical implications of the judgment? The ruling addresses three separate issues—two concerning ECROs, and a third relating to the effect of presenting a bankruptcy petition founded on an unpaid statutory demand where, without the petitioning creditor’s knowledge, an application to set that demand aside has already been lodged. On the ECRO front, the court underlines the force of CPR PD 3C, and applies it in clear terms. Where a litigant subject to an ECRO issues any claim falling within its scope, the claim is struck out automatically; no further step is needed unless permission has first been obtained from the court. Moreover, if permission is later granted under the ECRO, it does not retrospectively validate steps previously taken by the litigant—especially in relation to limitation, timetables, or other procedural deadlines that may already have expired. Instead, the permission simply allows the...

Davies v Revelan Estates ( Wigston) Ltd [2019] EWHC 1766 ( Ch) What are the practical implications of this case? The decision, handed down in January, offers a careful analysis of the make‑up of a guarantor’s covenant and how its terms shape the routes available to a creditor landlord when proceeding against a guarantor. Where, on a proper reading of the covenant, the sum due cannot be categorised as a liquidated amount, a statutory demand is not an appropriate mechanism for recovery. A promise by a guarantor to discharge sums the tenant has failed to pay is a liquidated liability; by contrast, a promise to compensate the landlord for any loss or damage arising from the tenant’s breach of its obligations creates an unliquidated liability. What was the background? The appeal challenged a refusal to set aside a statutory demand served on a guarantor under a lease. The...

Re: Dinglis Properties Limited [2019] EWHC 1664 ( Ch) What are the practical implications of this case? This is an unusual unfair prejudice matter where one party is entirely blameless. Commonly, in response to a perceived unfair act by a co‑venturer, a petitioner resorts to self‑help that, in one guise or another, breaches the understanding underpinning the quasi‑partnership or their obligations as a director, an employee, or both. Such behaviour frequently only surfaces during litigation after relations have collapsed and the petitioner has been excluded. In the typical scenario, where the respondent cannot defend the exclusion by reference to what they knew at the moment of exclusion, the outcome may turn on whether they can rely upon the petitioner’s conduct that occurred before and at the time of exclusion but was not known to the respondent then. This ruling confirms that the...

Times Travel ( UK) LTD v Pakistan International Airlines Corporation [2019] EWCA Civ 828 What are the practical implications of this case? This judgment makes clear that a contract will not be rescinded for economic duress where: the pressure applied is lawful, and the party applying that pressure genuinely believes they are entitled to act as they did, even if that belief might be criticised as unreasonable The decision also underlines the limited statutory framework for commercial agreements, confirming that such contracts cannot be avoided simply because of the lawful use of a monopoly or disparities in power or bargaining strength. Any evolution of the law in these fields is a matter for Parliament rather than the common law... What was the background? Times Travel ( TT), a small family-run travel agency in Birmingham, was in 2008 accredited by the...

Green v SCL Group [2019] EWHC 954 ( Ch), [2019] All ER ( D) 114 ( Apr) What are the practical implications of this case? Norris J’s decision in Green v SCL Group (widely known as Cambridge Analytica) offers insolvency practitioners clearer guidance on the evidence they must present to the court and on responding to creditors’ enquiries, and also illuminates the court’s stance on applications seeking to move an administration into liquidation. What was the background? The dispute concerned campaigner Professor David Carroll’s objection to the administrators of the UK Cambridge Analytica entities being appointed as liquidators, even though the vast majority of creditors supported them. The office-holders had entered office through an administration application. Professor Carroll maintained that: the joint administrators breached their duty of candour by failing to identify his claim and report it to the court they further breached that duty by not...

Caroline Tighe V (1) Alistair Fraser Peters (2) Mike Kienlen & Rob Adamson ( As Joint Administrators of Sprout Land Holdings Limited) [2019] What are the practical implications of this case? This ruling appears to illuminate two points arising from a stalemated board and a majority of shareholders seeking to put the company into administration, in that particular context and factual setting. First, the courts will not overlook a complete disregard of the statutory process for members’ resolutions under CA 2006, Part 2, as prescribed and expected by the legislation. In this matter, it was said the resolution would have passed in any event, so the court should forgive the company’s omission to consider and circulate it—both functions performed by a single director rather than the company. Moreover, although CA 2006, s 293 allows circulation at different times, under the statute itself, it is not meant to...

Currie v Thornley and another [2019] EWHC 172 ( Ch), [2019] All ER ( D) 19 ( Feb) What are the practical implications of this decision? Liquidators will typically insist on tightly drafted indemnity deeds when they are effecting distributions of a company’s assets to shareholders in an MVL, particularly where there remains any possibility of creditors bringing later claims in the liquidation. In Currie v Thornley and another, the company’s assets—real estate used in running a care home—were transferred to a limited liability partnership set up by the company’s former shareholders, at a point when contingent claims existed against the company. If those contingencies crystallised, the liquidator might face proceedings for failing to discharge his duties to the company by permitting assets to be transferred out before first settling sums owed to creditors. Although indemnity deeds are very common, especially in...

Sleight (as trustee of the estate of Jillian Paula Mascall deceased) v Crown Estate Commissioners [2018] EWHC 3489 ( Ch), [2018] All ER ( D) 111 ( Dec) What are the practical implications of this case? The holder of the funds (the chargee) had no beneficial stake in them, the party who had or might acquire an interest (the Crown) did not wish to take them, and the party who desired the funds (the trustee) had no means of getting them. A trustee can, by a sidewind, recover what has been disclaimed in like situations—in Lee v Lee [1999] Lexis Citation 3298, [1999] BPIR 926, on a chargee’s application for an order under section 320 of the Insolvency Act 1986 ( IA 1986), the court granted the order and, exercising its broad discretion, directed that any surplus after the charge was met should be paid to the...

What impact do the Business Contract Terms ( Assignment of Receivables) Regulations 2018 have on rights of set-off (contractual and other)? The explanatory memorandum to the Business Contract Terms ( Assignment of Receivables) Regulations 2018, SI 2018/1254 (the Regulations), states plainly that these provisions are introduced to render ineffective terms in specified contracts that restrict the assignment of receivables, with effect from 31 December 2018. As a result, many businesses that were previously prevented by contractual limitations will now be able to assign receivables and utilise products such as invoice financing in relation to sums owed to them. This may influence the right of set-off, as some businesses could opt for rapid liquidity by assigning receivables to a third party through arrangements like invoice finance, rather than exercising any right of set-off against invoices presented to them. The principle of set-off is firmly...

Bakhshiyeva (acting as the foreign representative of OJSC International Bank of Azerbaijan) v Sberbank of Russia [2018] EWCA Civ 2802 What are the practical implications of this case? The Court of Appeal reaffirmed the Gibbs rule, a point of real importance for financial institutions, creditors and any commercial party with agreements governed by English law. In consequence, creditors with English law debts can be confident that a foreign insolvency procedure cannot alter or compromise obligations governed by English law. As with many other international counterparties, Sberbank chooses English law for cross-border deals due to its neutrality, the certainty it affords, and the predictability of the English courts. This judgment underlines the reputation, dependability and commercial focus of English law and the English judicial system. The ruling will help ensure that English law (and jurisdiction) continues to be one of the leading choices of law for...

EDF Energy Customers Ltd (formerly EDF Energy Customers plc) v Re- Energised Ltd [2018] EWHC 652 ( Ch), [2018] All ER ( D) 02 ( Apr) What are the practical implications of this case? This decision restates—by analogy with personal insolvency authorities such as Harvey v Dunbar Assets [2017] EWCA Civ 60, [2017] All ER ( D) 127 ( Feb)—that, save in truly exceptional situations, a debtor company cannot revisit at the winding-up petition hearing the same contentions already determined on an application to restrain advertisement. The rule also captures points the company could have advanced earlier but did not. Allowing a second bite at the cherry would squander judicial resources and may engage res judicata. The ruling has consequences for how advisers approach applications to restrain presentation or advertisement: there is considerable peril in issuing a hurried application when not all potential arguments are...

What are the practical implications of this case? The bond was found to be triggered by insolvency alone because the parties had agreed a tailored clause to that effect. Even so, the ruling is of wider significance as it reinforces that, under the JCT termination regime: the contractor’s insolvency, by itself, is not a breach of contract by the contractor; and where, following insolvency, the contractor fails to remit sums due to the employer assessed under the contract—for example, the cost of engaging others to complete the works—that failure amounts to a breach of contract This distinction is important where an employer must first establish a contractor breach before calling on a performance bond. That is the position under the unamended ABI Model Form—for a suggested change on this point, see Practice Note: Amendments to ABI Model Form of Guarantee Bond. What was the...