Hull & Anor (Re Harmony Care Homes Ltd) v NHP Securities No 3 Ltd & Ors

Hull & Anor (Re Harmony Care Homes Ltd) v NHP Securities No 3 Ltd & Ors

The security granted to NHP in respect of book debt realizations from Hygrove House was a fixed charge due to NHP's control from inception; for the other 15 homes, insufficient evidence was provided to establish fixed charges, so proceeds are subject to floating charges unless NHP produces further evidence within 28 days.

Parties
Applicant: Stephen Hull; Applicant: Geoffrey Martin; Respondent: NHP Securities No. 3 Limited; Respondent: NHP Securities No. 5 Limited; Respondent: NHP Securities No. 9 Limited; Respondent: Her Majesty’s Revenue and Customs
Jurisdiction
England and Wales
Judgment Date
29 July 2009
Procedural Posture
Insolvency Application / Judgment on Application for Directions Under Section 35 Insolvency Act 1986
Outcome
Order made granting NHP 28 days to provide further evidence regarding the remaining 15 homes; if evidence is not produced, proceeds from those homes are subject to floating charges and available to preferential creditors; order takes effect after 56 days; receivers entitled to costs as expense of receivership.
Legal Topics
Priority of Charges, Fixed Vs Floating Charge, Distribution of Book Debt Proceeds, Preferential Creditors
Insolvency Secured Transactions Priority of Charges Fixed Vs Floating Charge Distribution of Book Debt Proceeds Preferential Creditors

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Parties

Stephen Hull

Applicant

Geoffrey Martin

Applicant

NHP Securities No. 3 Limited

Respondent

NHP Securities No. 5 Limited

Respondent

NHP Securities No. 9 Limited

Respondent

Her Majesty’s Revenue and Customs

Respondent

Procedural Posture

Insolvency Application / Judgment on Application for Directions Under Section 35 Insolvency Act 1986

Legal Issues

  1. 1 Whether book debt proceeds collected by receivers are subject to fixed or floating charges under NHP debentures
  2. 2 Whether preferential creditors are entitled to proceeds under Section 40 Insolvency Act 1986

Ratio Decidendi

The security granted to NHP in respect of book debt realizations from Hygrove House was a fixed charge due to NHP's control from inception; for the other 15 homes, insufficient evidence was provided to establish fixed charges, so proceeds are subject to floating charges unless NHP produces further evidence within 28 days.

Court Disposition

Order made granting NHP 28 days to provide further evidence regarding the remaining 15 homes; if evidence is not produced, proceeds from those homes are subject to floating charges and available to preferential creditors; order takes effect after 56 days; receivers entitled to costs as expense of receivership.

Orders

  • NHP granted 28 days to provide evidence to Receivers regarding control over book debt proceeds for remaining 15 homes.
  • If NHP fails to provide evidence, proceeds from those homes are subject to floating charges and payable to preferential creditors.