Court backs receivers on their actions

The Court dismissed proceedings brought against fixed charge receivers criticising their actions and alleging that they failed to sell for the best price reasonably obtainable.

The Claimant granted a lease to a connected company and granted a mortgage over the property to a lender. The tenant went into administration and the administrators sold the business and granted a licence to occupy to Aston Manor ("AM").

AM also took an assignment of the mortgage from the lender and enforced the security against the Claimant by appointing the Defendants as fixed charge receivers.

The Defendants granted a lease to AM, who ultimately bought the property from the Defendants for an amount in line with an independent valuation. The Claimant alleged that the Defendants had breached their duties, particularly failing to achieve the best price reasonably obtainable.

The Judge disagreed, following a lengthy examination of the facts, the authorities and the allegations against the Defendants and found that, whilst offers for greater amounts than the sale price had been made, those offers were not credible.

In addition, the Judge found that the Defendants did not put themselves in a position of conflict, had acted in good faith and for a proper purpose, finding no evidence of bad faith or improper purpose and rejecting the Claimant's twenty points on the issue.

The Judge also found that the Claimant had failed to make out the allegation that the Defendants had failed to take reasonable care to obtain a proper price.

Interestingly, the Judge also found that the experts' evidence was inadmissible as the experts could offer no better opinion on the Defendants' actions as receivers than the Defendants' own evidence as experienced receivers nor could they show that they were similarly qualified, as insolvency practitioners, to the Defendants, as fixed charge receivers.

Devon Commercial Property Limited v Barnett and Belcher [2019] EWHC 700 (Ch)

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