Sale of Business by Company in Administration - Court Ruling Increases Buyer's Exposure

In the recent case of Amble Assets LLP v. Longbenton Foods Ltd., the High Court ruled on the validity of a clause in a sale contract that provided for any liabilities of the seller or the administrator to rank as an unsecured claim against the seller (rather than, for example, as an expense of the administration). Such clauses are a common feature of administration sale contracts.

This decision means that should the administrator or seller breach their obligations under a sale contract, the buyer's remedies will be limited. It underlines the need to conduct thorough due diligence and for the buyer to take whatever steps it can to protect its own position.

For sound legal and commercial advice on such matters, please contact David Dees or Martin Banham-Hall.

Filed: 24/01/2012 12:17:45