The High Court has recently held that a company’s annual liability for non-domestic property rates was provable in full in a company voluntary arrangement (CVA) that was approved after the start of the year for which rates were due.
The relevant local authority had argued that, as the CVA company was entitled to pay the annual sum by instalments, only the instalments that had fallen due and were unpaid at the date of the CVA were provable.
The Court held that the entire annual liability for business rates was a contingent debt, and that such contingent liabilities were subject to the terms of the particular CVA.
This decision is beneficial to debtors that seek to compromise their full business rates liability in a CVA. However, it seems likely that local authorities will seek to argue that it should be limited to its facts, despite the judge’s view that it has a potentially wide application.
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