Legal Cases

Legal Cases Some of the most important legal cases that have made CVAs a powerful restructuring tool are the following:
Re: Doorbar v Alltime Securities Ltd (1995) BCC 1149 stated that landlords can be bound by voluntary arrangements for future obligations under a lease. This argument allows lease contracts to be terminated if it is for the good of the company as a whole. This is used to great effect with retailers much to the irritation of landlords. Recent high profile cases include Blacks and JJB Sports plc.

Re Dollar Land (Feltham) & Ors [1995] BCC 740 reported that the court decided that a winding-up order should be rescinded if there was a real prospect that CVA proposals would be approved by the company’s creditors. In other words let the CVA majority decide.

This can be used to seek injunctive relief against a winding up petition by an aggressive creditor to allow the business time to breathe and get its CVA proposal to the creditors. Or more realistically using knowledge of this case law, to persuade that creditor not to petition if possible. Our experience of “jaw jaw” or simply having a constructive dialogue with creditors before filing a CVA shows that most creditors will be supportive if someone takes time to explain what is going on with the debtor company. In a case called Chittenden v Pepper; Re Newlands (Seaford Educational Trust) [2006] EWHC 151 The courts found that if a debt is in the future and the liability cannot be determined at the meeting then the nominee should put a value on the future claim, normally this is £1 and therefore the creditor has the right to only vote for £1. In many ways this is fair as if a creditor has an uncertain claim they have not yet incurred an actual loss. For instance repairs to a property have not been carried out yet or arrears of rent have not been incurred…