LPA Receiverships & Administration

There are times when the appointment of an LPA Receiver or Administrators can have positive benefits for both the lender and the borrower.

LPA Receivers present an extra – judicial mechanism for lenders to recover debt sometimes without the need for or cost of formal court proceedings.

Administrators and receivers, acting independently to the appointers, require specialist lawyers familiar with what processes to follow, the extent of their powers, and duties to safeguard and protect their interests.

When receivers or administrators step in, they assume their own responsibilities and duties which can impact the lender/ borrower relationship and present a different set of challenges from a legal perspective.  Administrators and receivers also owe duties of care to the ultimate borrower, and anyone else with an interest in the equity of redemption.

We represent directly a number of leading insolvency practitioners, asset managers, and receivers in the field, providing advice in terms of best practice and assisting in the discharge of their legal duties.

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CASES

Glenmore Ltd v X Bank [ 2022]

In this case we acted for the Claimant and successfully recovered substantial damages against a high street bank in respect of a sale by them at undervalue. The Bank had failed to follow its own voluntary sale procedure, and failed to identify that a voluntary sale by its borrower had been arranged with a connected party and that the sale was not at market value. Glenmore, as second mortgagee suffered significant loss as well as the loss of its security which was overreached on sale.

Sobowale v Lendinvest Capital SARL[ 2024] EWHC 1829 (Ch)

The Chancery Division dismissed the appellant’s application against a decision of the deputy master to dismiss the appellant’s application to give evidence remotely, relief from sanctions, and for permission to rely on his witness statement. By that decision, the deputy master had given judgment in absence of the appellant in favour of the claimant for the requested sum plus compound interest continuing under costs overrun guarantee. Further, the appellant had been ordered to pay costs subject to detailed assessment on the indemnity basis. The appellant had appealed on grounds that by not permitting him to attend by remote attendance pursuant to CPR 52.21(3)(a) he had not been given a fair trial. Furthermore, that the court’s decision not to grant relief from sanctions to allow the appellant’s witness statement had been both wrong and wholly inconsistent. The court considered the deputy master’s reasons for dismissing the applications, including that it had been noted that the appellant had been unable to secure counsel and would be conducting his defence himself from Nigeria. The court held, among other things, that the factual basis for the application had not been made and that it had been fair for the deputy master to proceed with the trial in the appellant’s absence. Moreover, that the appellant’s defence had been struck out with no reasonable prospect of success at trial so accordingly the application for relief from sanctions would not be successful.

Heal & Another v Teenan & Gee & Richardson [unreported]

A case which effectively extended LPA Receivers power such that on the facts the Receivers rights of sale of livestock as agents for the borrower, which livestock the borrower would not remove to provide vacant possession on sale, was affirmed by the court, notwithstanding that the mortgage deed did not provide any security over anything other than the land.

Fortwell Finance Ltd v Halstead [2018] EWCA Civ 676

The case concerned a finance company that had provided a bridging loan to a borrower secured over a renovation property. The borrower had failed to repay the loan and the finance company then issued possession proceedings. The borrower, a qualified solicitor, compromised that claim by way of a consent order on terms providing for a delayed possession order, but then subsequently sought to set aside the consent order when he failed to refinance the loan. In dismissing the appeal against the decision not to set aside the consent order, the Court of Appeal rejected the borrower’s arguments that the act of entering into the consent order was itself the regulated activity of administering a regulated mortgage contract within the meaning of Article 61(2) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, which would have been in breach of the general prohibition in section 19 of FSMA 2000.

Funding Secure (in Administration) v Anwar & another (Unreported) [2022]

An important High Court judgment on secret commissions and enforceability, where notwithstanding the absence of documented disclosure as to fact or amount of commission paid to a broker, in a commercial transaction where the borrowers knew or ought to have known that a commission was to be paid, but made no enquiry in that regard.

Aodhcon LLP v Bridgeco Ltd [2014] EWHC 535 (Ch)

A leading case, where the High Court examined the duty of a bridging loan company had fulfilled its obligations to take reasonable care to obtain the best price reasonably obtainable when selling the property against which the loan was secured. His decision confirms that the duty of a mortgagee when exercising its power of sale is to take reasonable care to sell the security property for the best price reasonably obtainable. The mortgagee’s duty is not to sell at the best price reasonably obtainable. Further, the mortgagee will not be in breach of this duty unless they are plainly on the wrong side of the line. The mere fact that a higher sale price may have been achievable will not necessarily mean that a mortgagee is in breach of its duty. The decision also clarifies the factors which the Court will review when assessing a mortgagee’s compliance with its obligations.

Re Lendinvest BTL Ltd v Property Services LDN Ltd [2023] EWHC 1778 (Ch) (18 July 2023)

An interesting case where the lender faced multiple actions and injunctions restraining sales of properties in LPA Receivership based upon connected purported sales. Injunction was dismissed with costs, with the Applicant placed into liquidation, releasing the properties for sale, and protecting both lender and receivers from future litigation.

OUR TEAM

Dedicated, experienced and innovative. That applies to each and every one of our thirty-strong team. Between us, we offer expertise and advice across just about every legal sector, always cutting through the jargon and keeping it simple.

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A big thank you for all the hard work you put into getting our sale over the line. I would not hesitate to use you again and am already recommending you to my friends.

I wanted to express my gratitude for your efforts and expertise in helping us resolve the challenging case. Your legal acumen played a crucial role in bringing this matter to a satisfactory conclusion. BI

I want to tell you personally how much I have valued and appreciated all the many, many things you have done over the years to help me (and M Ltd) through the disputes we’ve dealt with together. Some interesting, some downright silly, some really challenging. It’s probably selective memory but did we really win every single one? GB

Whilst writing can I just put on record my thanks for your support and candid advice. It has been greatly appreciated. R.A

We greatly value your advice/assistance and look forward to continued growth in 2024 and beyond. MK

We value our relationship highly and we sincerely appreciate the exceptional service you consistently provide us. RR

PRESS & OPINION

The latest press and opinion from within the banking & finance world.

RECOGNITIONS