Prior to entering administration, the company had sold various of the flats off-plan under agreements for lease. These purchasers had paid 25% deposits.
The company obtained the court’s permission to sell the property as if it were free of non-floating charge security under paragraph 71 of Schedule B1 to the Insolvency Act 1986.
The court then had to determine the division of the sale proceeds among those parties that held non-floating charge security over the property. These parties were the company’s lender which held a mortgage charge and the purchasers who had equitable liens in respect of their deposits.
Lastly, ION Insurance Group S.A. had provided a deposit bond to the purchasers and had paid out under the bond to some purchasers, thereby becoming a subrogated creditor. Some (but not all) of the purchasers had put notices on the property’s title, noting their interest. These notices both pre and post-dated the lender’s registered mortgage charge.
The court determined that the terms of the agreements for lease entered by the purchasers did not subordinate their equitable liens to the lender’s mortgage charge (where the equitable liens were recorded with Land Registry notices prior to the mortgage charge being registered). However, each equitable lien was only deemed registered in respect of the flat that the respective purchaser had paid a deposit for and therefore the mortgage charge had priority to the sale proceeds for the other flats.
Williams v Alter Domus Trustees (UK) Ltd [2023] EWHC 1820 (Ch)
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