Legal Practice Notes

The sequence for distributing a company’s assets in administration is prescribed by the Insolvency Act 1986 ( IA 1986) and the Insolvency ( England and Wales) Rules 2016 ( IR 2016), SI 2016/1024. For a comparison of the payment waterfall across the various insolvency procedures, see Practice Note: Waterfall of payments—a comparative guide. The distribution framework in administration, once fixed charge holders have been paid, is summarised below. Moratorium debts and priority pre-moratorium debts CIGA 2020 inserted Part A1 into IA 1986, introducing a process that lets directors of insolvent companies, or those likely to become insolvent, obtain a 20 business day moratorium. Its aim is to give viable businesses time to restructure. If administration follows within 12 weeks of the moratorium, any moratorium debts and priority pre‑moratorium debts for which the company had no payment holiday during the moratorium, but left unpaid, will outrank all other...

Instead of having rolling stock looked after by a maintenance provider pursuant to a train services agreement ( TSA), an operator may decide to perform the maintenance itself, or arrange for a third party to undertake it under an existing maintenance agreement. For further details on TSAs, see Practice Note: Rail finance—train services agreements. If the Operator opts to maintain the rolling stock in-house, it may need specific technical support from the original manufacturer or from another supplier to carry out that maintenance. In those circumstances, the operator may enter into a technical support and spares supply agreement ( TSSSA). This Practice Note summarises the principal provisions of a standard TSSSA and outlines the core terms typically encountered. Parties to a TSSSA A TSSSA is generally a two-party arrangement between a supplier and the operator and, owing to the nature of the services to be...

Trustees and trust assets In numerous ways, obtaining security from trustees over trust property resembles taking security from chargors who hold the applicable asset outright. Factors that arise when securing obligations from an individual equally arise when securing obligations from individual trustees, and the same principle applies to their corporate counterparts. This Practice Note does not aim to address matters of general application when taking security; instead, it concentrates on particular points to keep in view when security is taken over trust assets. It highlights nuances specific to trust-held assets for lenders and advisers. This Practice Note addresses the following topics: the nature of trusts the powers of trustees to borrow and grant security specific issues to assess where security is taken over land regulatory aspects, and documentary considerations Please note, this Practice Note deals with issues concerning the taking of security from trustees generally and not charity...

This Practice Note examines whether arbitral tribunals may strike out, summarily dismiss, or swiftly determine claims or defences in arbitrations under English and Welsh law (using ‘ English’ and ‘ England’ as shorthand). It looks principally at section 39A of the Arbitration Act 1996 ( AA 1996), inserted by the Arbitration Act 2025, which empowers a tribunal to dispose of a claim, defence, or issue on a summary basis where there is no real prospect of success. It also considers AA 1996 s 41, which provides powers in cases of inordinate and inexcusable delay/want of prosecution, and where a party fails to attend an oral hearing or to make written submissions, alongside comparable provisions in the rules of certain international arbitral institutions... AA 1996—early dismissal of claims Under English law, tribunals now hold an express statutory power to make a summary award if, on a...

This Practice Note considers the legal and practical issues when entering into a subcontract or authorising subcontracting: What is subcontracting? When may subcontracting be allowed? The legal consequences of subcontracting Subcontractor’s liability for the contractor’s consequential loss Subcontractor’s liability to the customer What is subcontracting? While contractual rights and benefits are, unless expressly restricted, generally capable of assignment, contractual duties or burdens are not. Nonetheless, in some cases those obligations can be performed vicariously through subcontracting. Subcontracting is the delegation by the main contractor of part or all of its obligations under its contract with the customer to a third party (the subcontractor) for the subcontractor to perform. Where such vicarious performance is permitted, the contractor’s liability under the main contract does not pass to the subcontractor. The contractor remains answerable to the customer for any non-performance by the subcontractor, even if the customer has agreed to the...

This Practice Note discusses the personal nature of an agency relationship and the circumstances in which the agent may delegate its authority to a third party or sub-agent Because agency is inherently personal, the default position is that an agent must not pass to another the performance of its powers or obligations. Delegation may nonetheless occur if the principal consents or a statute confers such authority. Authority to delegate can also be inferred in particular circumstances, such as: where the agent’s role does not call for personal expertise or trust, and the tasks could adequately be carried out by someone else by established custom or usage of the trade where the principal knows, or can fairly be taken to know, that the agent plans to delegate and raises no objection where the character of the agency demands partial or...

On 27 April 2017, the third edition of the Standard Commercial Property Conditions was released and subsequently revised...

Types of security Under Scots law, the range of security interests is narrower than those available in English law. The form of protection depends on the particular class of asset being charged. This Practice Note reviews the securities obtainable over particular asset types before addressing the floating charge, a form of security that may be created by Scottish companies or limited liability partnerships. Fixed security Land and buildings The recognised fixed security over real estate assets in Scotland, available to both individuals and companies, is the standard security. A standard security may be granted over an interest in land that is recorded or registered in the General Register of Sasines or the Land Register of Scotland. Note the General Register of Sasines ceased to accept, among other matters, recording of new standard securities from 1 April 2016. From that day, a borrower granting security over a...

Should a borrower enter insolvency, the lender might be required to divide the borrower’s available assets with fellow creditors and, consequently, recover only a portion of the sums due. Lenders commonly take security to guard against this exposure and improve the chances of repayment. When security is in place, the lender acquires an interest over the security provider’s asset(s), offering comfort that, if the borrower becomes insolvent, amounts can be recovered. As an alternative (or as well), a lender may obtain a third-party guarantee in respect of the borrower’s obligations. If the borrower does not repay, the lender can demand payment from the guarantor. This further raises the prospect of repayment, especially where the guarantor has strong credit or holds influence or control over the borrower (for instance, where it is the borrower’s parent). Not every loan facility is secured. Both...

Definition ' Custody' (as it is commonly termed) is a regulated activity under article 40 of the Financial Services and Markets Act 2000 ( Regulated Activities) Order 2001, SI 2001/544 ( RAO). It comprises both of the following: the safeguarding of assets that belong to another person, and the administration of those assets. Arranging custody (for one or more other persons to carry on that activity) is itself a separate regulated activity under SI 2001/544, art 40. The activity applies to assets that are designated investments (ie securities or contractually-based investments). Administering an investment may, for example, include crediting income generated by an investment to the beneficiary's account; however, discretion must not be exercised when undertaking these functions, otherwise the conduct falls within another regulated activity (advising on investments, or managing investments), for which separate permission will be required....

This Practice Note assesses the documents needed for a residential mortgage backed securities ( RMBS) transaction from pricing to closing, naming the key parties to each and the principal points to weigh... The key documents are: offering document subscription agreement/note purchase agreement agreed upon procedures letter trust deed deed of charge paying agency agreement mortgage sale agreement mortgage administration agreement standby mortgage administration agreement cash management agreement liquidity facility agreement master definitions schedule corporate services agreement bank account agreement swap documents legal opinions risk retention memorandum Volcker memorandum risk retention letter reporting designation letter Each will be addressed in turn below... Signing date The documents below are settled and executed before the RMBS is announced and...

From the mid-nineteenth century, Parliament promoted gifts of land by individuals for charitable and/or other benevolent ends (especially concerning education and religion) by permitting the land concerned to return back to the original owner, or their heirs, if the land stopped being used, whether indefinitely or for a stated period of time, for the very purpose for which it had first been originally bestowed when granted......

To begin an arbitration under the Arbitration Act 1996 ( AA 1996), unless the parties have agreed a different approach, the usual step is for the claimant to serve a notice of arbitration (the Notice) on the respondent, calling for the appointment of, or agreement to appoint, the tribunal; see Practice Note: AA 1996—starting an arbitration. What to consider on receipt of the notice of arbitration Upon receiving the Notice, AA 1996 requires only that the respondent engage in constituting the tribunal. In practice, however, as soon as a Notice is received, the respondent (or its advisers) should check: that any applicable limitation periods have been met (or this may provide a defence) whether the Notice identifies the correct person or entity whether the Notice was served on the correct person or entity (noting that service by any effective means is...

Where a facility is committed (eg term loans and revolving facilities) For committed arrangements, the facility agreement will spell out precisely when and how the sums must be repaid. These agreements will usually also indicate: whether the borrower is permitted to repay before the scheduled repayment date(s) (ie make a voluntary prepayment), together with any conditions for such prepayments, including minimum amounts or any fees payable; and whether there are circumstances that oblige the borrower to repay all or part of the facility early (ie make a mandatory prepayment). Uncommitted facilities, such as overdrafts, will typically include a straightforward term stating the facility is repayable by the borrower on the lender’s demand. As there is no fixed repayment date, the borrower is generally free to repay whenever it wishes......

This Practice Note explores the contours of the reflective loss rule. It reviews the history and effects of the bar on reflective loss, pointing to the leading authorities that shaped it, namely Prudential Assurance v Newman Industries, Johnson v Gore Wood, Giles v Rhind and Marex v Sevilleja. It also highlights practical points sensibly borne in mind if you act for a shareholder and/or are engaged in a claim where the rule could be relevant. Summary of the rule against reflective loss The rule traces its origin to the principle in Foss v Harbottle: ie, where an actionable wrong is done to a company, the company is the proper claimant to recover any loss caused by that wrong. Put another way, where a duty owed to a company is breached and the company suffers loss, only the company may bring proceedings in respect of that loss. The...

This Practice Note explains protective costs orders ( PCOs), which restrict the quantum of costs payable in litigation. It outlines when the court may grant a PCO, what such an order looks like, the process for seeking one, and the consequences on costs if the bid fails. It also reviews authorities on PCOs in closed material proceedings, and addresses cost capping orders. A protective costs order ( PCO) exists to ensure claimants are not shut out from advancing meritorious claims purely because of the financial risk. It does so by capping the exposure to costs within the proceedings. While costs capping orders ( CCOs) likewise impose limits, PCOs and CCOs must be kept distinct: the jurisdictional bases differ, and their roles and aims are not the same. The court’s power in respect of each derives from separate sources, and the functions served by the two...

Rider for archived Practice Notes ARCHIVED: This Practice Note is archived and no longer updated. It is retained solely for historical context, as it addresses CPR 81 as it stood before 1 October 2020, and Practice Direction 81, which was wholly revoked with effect from 1 October 2020. If you are handling a committal application on or after 1 October 2020, consult the current CPR 81 and the relevant Practice Notes—see: Contempt and committal—overview. For the pre‑1 October 2020 iteration of CPR 81 or Practice Direction 81, see: This Practice Note outlines the procedure for issuing committal proceedings, whether for contempt or for breach of a writ of sequestration. It also sets out the steps required when making an application for committal. For help on the court’s approach to committal (including the various hurdles to overcome), see Practice Note: Committal...

This Practice Note examines the procedural law of arbitration proceedings and how it is identified under the law of England and Wales ( England and English are used as convenient shorthand). The procedural law of the arbitral proceedings The procedural law of an arbitration is also known as the ‘lex arbitri’ or the ‘curial law’. It sets the framework for the arbitration’s internal procedure and the scope of the courts’ powers to supervise and assist the process, where appropriate. The particulars of how an arbitration should proceed are ordinarily fixed by any applicable arbitration rules, the tribunal’s procedural orders, and the parties’ agreement, as circumstances require. The curial law may nevertheless supply default provisions and impose constraints on the parties’ autonomy. As each country enacts its own procedural rules, the reach and content of the procedural law will differ from one...

There are various ways to structure consideration, and it can be altered after completion to align the price with what the buyer considers the true value. From the seller’s perspective, the optimal outcome is a cash payment of the full purchase price on completion, with no later adjustment. For the buyer, whether this is workable or attractive depends on the cash it has available and its confidence that the amount agreed at completion genuinely matches the value of the shares or assets to be acquired. Lacking that certainty, the buyer will usually seek a right to amend the consideration afterwards or to delay part of the payment to a later date......

Where a joint operating agreement ( JOA) establishes an operating committee ( Op Com)—at least where the JOA contemplates such a body, as some do not—the Op Com is typically the primary arena in which the operator and the non-operating parties contest their positions. This Practice Note proceeds on the basis that a participant in the concession and the JOA is appointed as operator, rather than an engaged third-party operator, while noting that the principles set out here apply equally in respect of an incorporated operator entity, and that the JOA provides for an operating committee ( Op Com) constituted to represent and safeguard the interests of the non-operating parties. For general information on joint operating agreements, see Practice note: The purpose and the principles of the joint operating agreement. The operator's perspective At a high level, the operator’s task is to exercise its rights and...