“(1) The administrator of a company must perform his functions with the objective of – (a) rescuing the company as a going concern, or (b) achieving a better result for the company’s creditors as a whole than would be likely if the company were wound up (without first being in administration), or (c) realising property in order to make a distribution to one or more secured or preferential creditors. (2) Subject to sub-paragraph (4), the administrator of a company must perform his functions in the interests of the company’s creditors as a whole. (3) The administrator must perform his functions with the objective specified in sub-paragraph (1)(a) unless he thinks either – (a) that it is not reasonably practicable to achieve that objective, or (b) that the objective specified in sub-paragraph (1)(b) would achieve a better result for the company’s creditors as a whole. (4) The administrator may perform his functions with the objective specified in sub-paragraph (1)(c) only if – (a) he thinks that it is not reasonably practicable to achieve either of the objectives specified in sub-paragraph (1)(a) and (b), and (b) he does not unnecessarily harm the interests of the creditors of the company as a whole.”
“In my view, where a Company in administration is balance-sheet solvent, the Administrators have a duty to have regard to the interests of the Company’s members as a whole when deciding on the appropriate course of action. Paragraph 74 of Schedule B1 itself makes this plain. It is drafted in a way that gives members a remedy where the acts of the administrators cause unfair harm to them and it contemplates that the interests of the members as a whole are central to the question of what if any relief should be granted. That duty will be particularly significant where the position of creditors is unaffected by the decision that they take. It follows that, if there is more than one alternative way forward, but there is no material difference between them in either achieving or failing to achieve the first statutory objective (paragraph 3(1)(a)), I think that administrators should normally adopt the course of action which is most likely to be in the interests of the members as a whole.”
“Upon appointment administrators were bound: (a) To review their opinion about the objective of the administration; (b) Having decided upon seeking a better return for creditors than would be achieved by an immediate liquidation, then to perform their functions in relation to that objective in the interests of the company’s creditors as a whole; (c) To perform their functions as quickly and as efficiently as was reasonably practicable; (d) Recognising that acting in the interests of the company’s creditors as a whole may involve the balancing of competing sectional interests, to avoid acting so as unfairly to harm the interests of any particular creditor or group of creditors…”
“[37] I also agree with the Chancellor that, if an administrator is unbiased and entitled on the material before him to reach a relevant decision, such as a decision not to bring legal proceedings, his decision should be respected until the court concludes otherwise and the fact that another administrator might reach a different conclusion may be a reason to challenge the decision, but cannot be a reason to remove the administrator altogether. [38] In this case the respondents knew and understood the wishes of the appellants as the majority of unsecured creditors and their status as investors and guarantors; received and took account of submissions from them and their advisers; received independent specialist advice from two firms of solicitors; properly investigated the matter of possible proceedings; weighed up the prospects; and decided against bringing s.244 proceedings.”
“[21] …It is fundamental to our adversarial system of justice that the parties should clearly identify the issues that arise in the litigation, so that each has the opportunity of responding to the points made by the other. The function of the judge is to adjudicate on those issues alone. The parties may have their own reasons for limiting the issues or presenting them in a certain way. The judge can invite, and even encourage, the parties to recast or modify the issues. But if they refuse to do so, the judge must respect that decision. One consequence of this may be that the judge is compelled to reject a claim on the basis on which it is advanced, although he or she is of the opinion that it would have succeeded if it had been advanced on a different basis. Such an outcome may be unattractive, but any other approach leads to uncertainty and potentially real unfairness.”
“I understand from my call with Marc [Atkinson] this morning that we are at a crucial stage of the administration process and you are doing all you can to make sure the benefit of the balance of the Murfitt Henson land is not lost to both P3 and Desiman. If you are able to secure that position and avoid a forced sale, as I’m sure you will, in good faith CFJL will increase your benefit in the existing contract from 20% to 50%.”
“Accordingly, if the Phase 2/3 Property Sales Fee was valid, CFJL was left in a situation where the Murfitt Henson contract [i.e. the 2017 CSA] had been assigned to Desiman subject to a sale fee since, until that sale occurred, the sum required to pay for the redemption could not be calculated and we were stuck in administration. This is of fundamental importance to other creditors as well as the shareholders. The sales fee has been utilised by Desiman as a serious block on the equity of redemption and preventing refinancing to the disadvantage of all parties except Desiman and delaying the point at which other creditors can be paid and we would come out of administration.”
“The 20% was predicate [sic] on Desiman having to block the use of the funds to fund a payment of£5.5 million to be utilised as part payment of a judgment obtained by Brooke Homes (Bicester) Limited and£ 11 million to purchase the Phase 2 and Phase 3 land. In fact, no sales fee was due as Desiman never was required to block funds and neither£5.5 million nor£11 million were ever drawn down nor advanced under the facility. Moreover the funds could not be blocked or paid over as it was a condition precedent to the funds being drawn down that a contract for sale of Tranche 1 of the Land had been concluded with Countryside Properties (UK) Limited ["Countryside"] and Desiman terminated contractual discussions with Countryside, purportedly on behalf of CFJL but without the authority of the directors of that company.”
“Loan Fee In addition to the Interest and exit fee as above, upon onward sale of the new land phases, Desiman will receive 20% of the net sale proceeds (for the avoidance of doubt net of the completion figure paid for the purchase and any associated deductions as may be made for s106 costs), apportioned pro-rata should those lands be broken up and sold piecemeal. In order for us to commit to such substantial loans, we have agreed that in such case as the P3 parties did not require to draw Desimans loans, the Loan Fee will still be due, as if the funds had been drawn. For instance, if an early onward sale of a future phase came about, thus facilitating a back to back to provide adequate funds to complete the land purchase and pay Brooke, meaning that the Desiman loan funds were no longer required, the Loan Fee would be considered due, but not the interest or exit fee.”
“Places for people- Whilst the headline terms appear strong financially, having reviewed the details a number of conditions that they stipulate just simply won’t be achievable or indeed desirable from the landowners perspective (particularly in relation to delivering infrastructure or the energy centre). For those reasons alone, I don’t see how this offer could be progressed further unless those conditions were removed entirely. The need to be asked as to whether they are willing to consider these conditions be removed.”
“if we removed all conditionality save for - Subject to contract and Board Approval - Legal due diligence Would our offer of£100m be of interest?”
“The P3 Group directors have confirmed to the Administrators they are prepared to give Desiman 50%, Desiman want 65%, a difference of 15%. Based on the EOS prepared, the additional profit that would be given to Desiman with a 65% split rather than 50% would be c.£8,000,000 . But as it stands, the only option for a phased sale requires Desiman’s full cooperation which they have advised comes with the 65% profit split. A sale of the whole site in one go to St Conger [sic] would result in no return to the P3 Group shareholders. If certain elements of the Desiman redemption were challenged i.e. the sales fees and profit share interpretation, then the return to the shareholders could be c.£11,000,000 . This would be contested by Desiman and they would likely refuse to release their security on this basis, though the Administrators could pursue this under Para 71 IA1986. The fallout would be costly and time-consuming litigation, which would delay distributions to all creditors, as well as theP3 Group shareholders. In addition, any sale would be frustrated and may ultimately fail. Any post-completion delay in distributing funds whilst the Desiman redemption figure was litigated would be to the detriment of the subsequent creditors. The sale to Cala even with a 65% fee share for Desiman appears to provide a return to the P3 Group shareholders of c.£18,500,000 , with the further prospect of an overage payment of£1,837,500 on the Phase one mixed use site, this being 35%of the potential overage for an additional 150 units at£35,000 per unit. So a total return of in excess of£20,000,000 to shareholders. In addition to the 65/35 split of the overage payment, Desiman are proposing to reduce the Pains Property sale fee to£2,500,000 . Based on the last redemption statement, this suggests a saving of c.£5,000,000 to the P3 Group. The Administrators have considered the overall position, and the Cala deal is by far the best outcome, and prevents a sale of the whole site now at a significant discount which would have resulted in no return to the P3 Group shareholders and little/no return to unsecured creditors. It will achieve a repayment of all creditors, with an agreed mechanism in place, as well as provide a significant profit on the CFJL land. The Cala deal can only occur with Desiman’s support. This support comes at a considerable risk to Desiman, not only having capital tied up in the deal for at least another 5 years, but that the option with Cala does not complete and an alternative sale of Phases 2/3 has to be negotiated, which could be at a lower price. There is the added loss of profits on the funds that could have been lent to other deals. It is for these reasons that Desiman will only provided their continued support for a new profit share of 65%. It is for the reasons set out above that the Administrators believe that the overall benefit for creditors and shareholders are being achieved by considering the new facility agreement on behalf of CFJL, and new sales fee on P3Eco and PPP for the overage agreement.”