‘Insolvency and Companies Court (ICC) Judge Barber held that the Lundy Granite principle does not extend to an obligation to ‘top up’ a rent deposit fund, where sums had been withdrawn from the fund to pay rent. Re London Bridge Entertainment Partners shows how seemingly immaterial business decisions made when an entity is solvent will be thrown into relief when the same entity becomes insolvent. Here, the decision to ‘pay first, ask questions later’ from the deposit fund meant that the landlord effectively lost its priority ranking in respect of those rent payments; a priority it could otherwise have been entitled to. The case also demonstrates that the ambit of provable debts will continue to be construed broadly, while the category of administration expenses will be narrowly construed. Written by Samuel Parsons, barrister at Guildhall Chambers.’
Guildhall Chambers, 22nd November 2019
Source: www.guildhallchambers.co.uk
