Simon Davenport QCand Tom Poole have been instructed by Humphries Kerstetter on behalf of the liquidators of One Blackfriars Limited, the previous developer of the high profile London tower One Blackfriars, in relation to a multi-million pound claim against the former administrators of the company.
The claim relates to the sale of the development site at an alleged undervalue in October 2011 by joint administrators appointed by the principal secured lender, RBS. The site was sold without a valuation on terms which sustained a large loss for the junior secured and unsecured creditors but saw RBS and the syndicate lenders paid out in full.
The substance of the claim is that the defendants, who are insolvency practitioners at accountancy firm BDO, effectively acted as bank receivers rather than administrators pursuing their principal statutory objectives. It is pleaded that, amongst other matters, they acted misfeasantly in engaging CBRE - who had previously advised RBS directly in relation to its wish to dispose of the site - as sole marketing and sale agent.
The site was sold for £77.4m without the benefit of an enhanced planning consent which was advised to be achievable by the company’s planning consultants. Further, the sale contract did not contain any overage provisions or conditionality. Shortly after exchange of contracts CBRE made a revised planning application on behalf of the purchaser, St George, which was granted. 18 months later St George ascribed a value of £232m to the site in its accounts.
The claim is being vigorously defended by insurers for the former administrators. The defendants first brought an application seeking to force early service of the particulars of claim and subsequently opposed the claimants’ application for permission of the court to commence proceedings. In so doing, the defendants took the novel position that an application by licensed insolvency practitioners for permission to bring insolvency proceedings against former officeholders must be supported by expert evidence served at a pre-action stage or it would otherwise amount to an abuse of process. Both applications failed.
The most recent judgment can be found here. The Judge held that the claims had a “proper foundation” and granted permission for them to proceed to trial. The judgment clarifies the law in relation to the commencement of insolvency proceedings by officeholders and the attendant evidential requirement. It will be the subject of a practice note to be published shortly.