Specific performance of contracts entered into prior to UK administration proceedings
By Richard Colebourn
Where a counterparty was entitled to specific performance of a contract with a company prior to its entry into administration, unless it would offend the parri passu principle and unfairly take away assets for the distribution to creditors, the counterparty should still be entitled to specific performance.
AWear UK was a high-street retailer specialising in women’s clothing and accessories. The company traded at a loss from its incorporation in 2008 and, in 2011, entered into agreements with its landlords for the surrender of the leases in respect of its stores in Leicester and Bristol (the ‘surrenders’). Monies were placed in escrow pending completion of the surrenders but, in the interim, the company went into administration.
The administrators applied to court for directions as to whether the landlords were entitled to the escrow monies or that the landlords were entitled to specific performance of the surrenders (which would result in them being paid the escrow monies upon completion)…
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