Perpetual Trustee Company Ltd & Anor v BNY Corporate Trustee Services Ltd & Ors

Perpetual Trustee Company Ltd & Anor v BNY Corporate Trustee Services Ltd & Ors

The anti-deprivation rule does not invalidate the contractual 'flip' provisions or the linked share acquisition and licence termination clauses, as they do not remove property from the insolvent estate contrary to the statutory insolvency regime, but rather regulate priorities or rights as part of the original bargain, and/or were triggered before insolvency. The rule is confined to preventing the removal of assets from the estate upon insolvency, not to regulating the economic effect of valid contractual arrangements.

Parties
Respondent/claimant: Perpetual Trustee Company Limited; Respondent/claimant: Belmont Park Investments Pty Limited; Appellant/defendant: BNY Corporate Trustee Services Limited; Appellant/defendant: Lehman Brothers Special Financing Inc; Joint Administrator: Daniel Francis Butters; Joint Administrator: Neville Barry Kahn; Joint Administrator: Nicholas James Dargan; Appellant/defendant/respondent: BBC Worldwide Limited; Claimant/appellant/defendant/respondent: 2 Entertain Limited; Claimant/appellant/defendant/respondent: BBC Video Limited
Jurisdiction
England and Wales
Judgment Date
06 November 2009
Procedural Posture
Civil Appeal / Court of Appeal Judgment on Appeal From High Court
Outcome
Appeals by LBSF and the administrators dismissed; cross-appeal by BBC Worldwide Limited allowed.
Legal Topics
Anti Deprivation Rule, Insolvency Proceedings, Contractual Priorities, Liquidation, Administration, Shareholder Agreements, Licensing Agreements
Insolvency Law Contract Law Company Law Anti Deprivation Rule Insolvency Proceedings Contractual Priorities Liquidation Administration +2 more

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Parties

Perpetual Trustee Company Limited

Respondent/claimant

Belmont Park Investments Pty Limited

Respondent/claimant

BNY Corporate Trustee Services Limited

Appellant/defendant

Lehman Brothers Special Financing Inc

Appellant/defendant

Daniel Francis Butters

Joint Administrator

Neville Barry Kahn

Joint Administrator

Nicholas James Dargan

Joint Administrator

BBC Worldwide Limited

Appellant/defendant/respondent

2 Entertain Limited

Claimant/appellant/defendant/respondent

BBC Video Limited

Claimant/appellant/defendant/respondent

Procedural Posture

Civil Appeal / Court of Appeal Judgment on Appeal From High Court

Legal Issues

  1. 1 Does the anti-deprivation rule invalidate contractual provisions that alter priorities or rights upon insolvency?
  2. 2 Does the timing of the deprivation (before or after insolvency) affect the rule's application?
  3. 3 Do linked provisions in joint venture and licence agreements offend the anti-deprivation rule?

Ratio Decidendi

The anti-deprivation rule does not invalidate the contractual 'flip' provisions or the linked share acquisition and licence termination clauses, as they do not remove property from the insolvent estate contrary to the statutory insolvency regime, but rather regulate priorities or rights as part of the original bargain, and/or were triggered before insolvency. The rule is confined to preventing the removal of assets from the estate upon insolvency, not to regulating the economic effect of valid contractual arrangements.

Court Disposition

Appeals by LBSF and the administrators dismissed; cross-appeal by BBC Worldwide Limited allowed.

Orders

  • LBSF's appeal against the Chancellor's decision is dismissed.
  • Administrators' appeals against Peter Smith J's decision are dismissed.