Mizen Design/Build Ltd - Case Update

The High Court has granted permission for the continuation of proceedings against Mizen Properties Ltd (“Mizen Properties”), a subsidiary of Mizen Design/Build Ltd (“Mizen”) which is also in administration. The Court has also entered default judgment in favour of National House Building Council (“NHBC”).

We last wrote about Mizen in early June, after the High Court upheld a challenge to the company’s CVA on the basis of a material irregularity based on failure to disclose information to creditors and unfair prejudice based on vote swamping. Brian Burke and Andrew Andronikou of Quantuma Advisory were appointed joint administrators. An appeal by the company was dismissed.

Around the same time, NHBC was pursuing a claim against Mizen Properties, alleging the company was liable pursuant to an Indemnity in respect of the contractual obligations of Mizen. Mizen Properties did not file a defence, but applied for summary judgment asserting that NHBC’s claim had no real prospect of success because it had been compromised by the terms of the CVA. However, as noted above, the CVA was successfully challenged.

On 10 July, on the afternoon before NHBC’s application for default judgment, Mizen Properties also entered administration. Brian Burke and Dane O’Hara of Quantuma Advisory were appointed as joint administrators. Mizen Properties then attempted to rely upon the automatic stay to prevent judgment being entered.

The High Court ultimately granted permission for the continuation of proceedings and entered default judgment against Mizen Properties. The judge held that exceptional circumstances existed to justify allowing a creditor with a monetary claim to override the statutory stay. This was due to (i) the lateness of the administration, (ii) the lack of arguable defence to the claim, (iii) the considerable length of time during which the proceedings had been ongoing, and (iv) the fact that a judgment in NHBC’s favour would not be to the detriment of Mizen Properties and its creditors and would crystallise a costs order in NHBC’s favour.

The joint administrators have been assisted by Shoosmiths. Their proposals in respect of Mizen Design/Build can be found HERE, and a summary of the decision affecting Mizen Properties can be found HERE. Simon Mills of Radcliffe Chambers represented NHBC, with BP Collins acting as solicitors.