QUEENS BENCH DIVISION
BIRMINGHAM DISTRICT REGISTRY
B e f o r e :
Specialist Mercantile Judge
s.9 Senior Court Act.
|BULBINDER SINGH SANDHU|
|(trading as Isher Fashions UK)||Claimant|
|JET STAR RETAIL LIMITED t/a MARK ONE (IN ADMINISTRATION|
Crown Copyright ©
"Whether the Claimant has any claim as pleaded in the Particulars of Claim in respect of any goods:
(i) held in stock by the First Defendant upon it entering into administration on 19th November 2008 but sold before the sale of the business to Internacionale Retail Limited on 25th November 2008; or
(ii) held in stock by the First Defendant at the time of the administration and delivered to Internacionale Retail Limited pursuant to the 25th November 2008 agreement."
8th May 08 The Company was incorporated to acquire assets of the Mark One chain from the administrators of Northworld Ltd.
27th May 08 Completion of purchase by the Company of the Mark One chain from Northworld Ltd (for £7.1m, to be paid by £1.5m on completion, and deferred consideration of £5.7m payable on 13th September 2008). At the time of completion the Company was owned by Mark Brafman and Bali Singh (50% shareholders each).
9th June 08 Isher and Jet Star contract and conditions of sale of stock.
27th Oct 08 Winding Up Petition presented against the Company by Jogo Associates Ltd (with a hearing date scheduled for 22nd Dec 08).
30th Oct 08 Bali Singh (the Claimant) became 100% shareholder of the Company (buying Mark Brafman's 50% share). With no director in place, Bali Singh appoints a Mr Bastock as sole director.
11th Nov 08 Northworld Ltd made demand (by its Administrators) against the Company for payment of £3.027m.
19th Nov 08 The Stock report of the Company recorded that it held 208,258 Isher items costing £811,822" valued at"£2,376,760 with a Creditor Balance of £580,841.36". Branches held £559,849 worth but the warehouse held £252,032.
20.40pm: Administrators were appointed over Jet Star Retail Limited. Neil Bennett and Michael Healy appointed Joint Administrators (by QFC holder Northworld Ltd).
The Joint Administrators found that the electronic stock and sales records management system had failed rendering the tracing and identifying of stock impossible. .
20th – 24th Nov 08 Stock with realisations aggregating £162,064 was sold by the Company per the Administrators.
25th Nov 08 Sale by the Administrators of the Company's leasehold properties and stock to Internacionale in consideration £1m with the stock element being sold for £750,000. Excluded assets (subject to ROT claims) were delivered up to Internacionale.
28th Nov 08 Joint Administrators received a letter from Freeth Cartwright on behalf of the Claimant alleging a ROT claim under 6.2 of the Contract of 9th June 2008. This was the first time they were aware of the Contract or any ROT claim by Isher.
5th Dec 08 Joint Administrators (by its solicitors Sprecher Grier Halberstam LLP)) respond to Freeth Cartwright 28th Nov 08 letter.
2 Jun 09 Disclosure by joint administrators of sale agreement to Internacionale. Mr Singh maintains this was the first time he was aware that goods subject to ROT claims had not been sold. 
.. "Isher Fashions shall retain property, title and ownership of the Products until it has received payment in full in cash or cleared funds of all sums due and/or owing for all Products supplied to the Customer by Isher Fashions under this Contract and any other agreement between Isher Fashions and the Customer."
Judgment on submissions
" 7.1.4 If the Customer is, or is deemed to be unable to pay its debts or is
insolvent, suspends making payments on any debts or announces an
intention to do so, commences negotiations with one or more of its
creditors with a view to rescheduling any of its indebtedness by reason of actual or anticipated financial difficulties, has a moratorium declared in
respect of any of its indebtedness, ceases or threatens to cease to carry
on business, applies for an interim order under Section 252 Insolvency Act
1986 or has a bankruptcy petition presented against it, has appointed in
respect of it or any of its assets a liquidator, trustee in bankruptcy, judicial
custodian, supervisor; compulsory manager, receiver, administrative
receiver, administrator or similar officer (in each case whether out of court
or otherwise).pledges or charges any Products which remain the property
of Isher Fashions, takes or suffers any similar action in any jurisdiction or
any step is taken (including without limitation, the making of an application or the giving of any notice) by it or by any other person in respect of any of these circumstance
then Isher Fashions shall have the rights, without prejudice to any other remedies, to exercise any or all of the following rights:
7.1.11 Isher Fashions may cancel, terminate and/or suspend without liability to the Customer any contract with the Customer; and
7.1.12 all monies owed by the Customer to Isher fashions shall forthwith become due and payable". ".
"Administration does not have any effect on the legal personality of the company, nor does it, of itself, have any effect on a third party's contractual obligations to the company; nor (without more) does it terminate contracts to which the company is a party. …. A contract, however, will very often provide for its termination, or for the obligations or rights of one or other of the parties to come to an end if it enters administration." A footnote states "It will, of course, be a question of construction as to whether notice is required before termination or whether it happens automatically."
21st April 2010
His Honour Judge Simon Brown QC
Specialist Mercantile Judge
s.9 Senior Court Act.