Stay of proceedings in consequence of restructuring plan

Published on
2 min read

A restructuring plan to compromise certain landlord claims was allowed to proceed without being impeded by judgment being entered on a landlord’s claim for arrears.

The claimant applied for summary judgment on its claim for rent arrears brought against the defendant. The defendant applied for a stay of the claim, alternatively, a stay of enforcement of any judgment on the claim. The defendant was pursuing a restructuring plan under Part 26A of the Companies Act 2006. Under the plan, the landlord was one of a class of landlords whose arrears were to be written off in exchange for receiving 120% of the sum the landlord would receive in a hypothetical administration. The defendant argued that granting judgment on the landlord’s claim would result in unequal treatment of creditors.

The court held that a stay should be ordered. The court reasoned that whether or not to grant a stay was highly fact specific. Of particular relevance to the court’s conclusion was (1) the fact that there was a short period of time (only some six weeks) before the sanction hearing for the restructuring plan; and (2) there was a reasonable prospect that the restructuring plan would receive the sanction of the court.

The court went on to hold that, rather than staying judgment on the claim, the claim itself should be stayed on the ground in effect that entering judgment and then staying enforcement might still enable the claimant to pursue non court enforcement remedies.

Riverside CREM 3 Ltd v Virgin Active Health Clubs Limited, Chief Master Marsh

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