Adjudication v insolvency process

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The Court of Appeal clarifies the interaction between adjudication, liquidation and CVAs.

The Court of Appeal heard appeals in the Bresco and Cannon cases.  In Bresco, a company in liquidation had commenced adjudication proceedings, which had been injuncted with a finding that there was no jurisdiction to commence adjudication in the circumstances.  In Cannon, the court granted summary judgment based on adjudications pursued by a company that was in a CVA.

On Bresco, the Court of Appeal held that there was jurisdiction to commence adjudication where one of the parties was in insolvent liquidation (allowing the appeal on that point), but recognised the incomparability between the two processes.  The Court of Appeal's solution to that issue was to agree with the first instance decision that the adjudication should be injuncted.

On Cannon, the Court of Appeal applied their decision in Bresco and held that there was jurisdiction for an adjudication, also finding that Cannon had waived that argument in not raising it in the adjudication in any event.

On the question of the granting of summary judgment, the Court of Appeal distinguished the insolvent liquidation and CVA processes and held, if the appeal was still live, it having been withdrawn two weeks after the hearing, that it would have been dismissed and the Judge's decision to refuse a stay of execution upheld.

This is welcome clarification that the adjudication of claims and cross claims in a liquidation should be done within the bounds of the insolvency legislation by decision of the liquidator, which can be appealed to the court if disputed and the recognition that, whilst a CVA is an insolvency process, it is not terminal and enables continued trade under the executive control of the directors.

Bresco v Lonsdale and Cannon v Primus [2019] EWCA Civ 27

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