R&I Update - May 2023 – 1 / 5 观点
The High Court has delivered a significant judgment on the characterisation of fixed versus floating charges.
Administrators appointed to Avanti Communications Limited effected a pre-pack sale of its business and assets, including the "Relevant Assets": the satellite, network and ground stations, orbital slots and other related assets.
Fixed or floating charge?
The Administrators sought directions from the Court as to whether security granted over the Relevant Assets constituted fixed or floating charges at the time of creation. The Administrators adopted a neutral stance on the application, and the secured creditors were given leave to appear. A 'fixed charge characterisation' would allow the secured creditors to recover in full, whereas a 'floating charge characterisation' would reallocate part of the recoveries to UK tax authorities as preferential creditor and unsecured creditors (up to the 'prescribed part' of £800,000).
In a detailed judgment, Edwin Johnson J held that the Relevant Assets were subject to a fixed charge. In doing so, he considered:
The judgment provides helpful and detailed guidance for future disputes as to the proper characterisation of security.
To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.
For further reading on this significant judgment see our Lending Focus article here.
作者 Bob Rikkert