The Master of the Rolls, Lord Phillips, last week reversed an earlier ruling in the case of Natwest Bank v Spectrum plus.
In doing so he returned priority creditor status to the banks, by deciding that their charge on book debts had ‘fixed’, rather than the inferior ‘floating’ status.
The main loser appears to be the taxman. Banks – rather than preferential creditors, chiefly the Inland Revenue and Customs – are now in line to receive millions of pounds left over from historical liquidations.
Insolvency practitioners have been sitting on the money for three years, waiting for clarification after recent cases created confusion over a status quo established in 1979.
Gordon Stewart, head of restructuring for Allen & Overy, which acted for Natwest, said: ‘Several hundred million pounds are currently held in suspense. The court has recognised it would be unfortunate if the goalposts had been moved after 25-plus years.’
But the crown has signalled it wants to take the case all the way to the House of Lords, leaving IPs with no final word on how to distribute funds.
Chris Ashurst, a partner with Mazars, said the decision also meant continuing uncertainty over the best method of financing business.
Steve Absolom and Will Wright from KPMG Restructuring have been appointed joint administrators to City Motor Holdings and associated companies
Partners from Johnston Carmichael have been appointed as joint administrators to Axon Well Interventions Products UK
Begbies Traynor have been appointed administrators of William Anelay Ltd, York, one of Britain’s longest-established construction and heritage restoration companies
Smith & Williamson has been appointed administrators of charity 4Children