Stephens Scown

Understanding the basis of the occupation of the land is important for two reasons:•the rights available to the insolvent estate will determine the realisation strategy•the risk that an occupier of the land under the insolvent estate has acquired rights of occupation against the insolvent estate. For example, what might appear to be a simple licence might give rise to protected rights requiring certain notice procedures to be followed in order to obtain vacant possessionThere are two regimes for the occupation of agricultural land:•an agricultural holding governed by the Agricultural Holdings Act 1986 (AHA 1986). This applies to tenancies where the tenant was entitled to take possession of the land before 1 September 1995, and although becoming less common, are still prevalent. Such tenancies are sometimes referred to as ‘agricultural holdings act tenancies’ and for the purposes of this Practice Note they will be referred to as agricultural holdings•a farm business tenancy (FBT) under

Irrespective of what the diversification project is, the practitioner will need to consider two pervasive issues:•the structure of the diversification project; and•the land on which it operatesThe structure of the diversification projectThe type of entity under which the diversification project is carried out could have a bearing on how the practitioner approaches dealing with it. For example, is it contained within its own special purpose vehicle over which the practitioner has been appointed, or is it just one income stream in a wider agricultural business?The following issues may arise:•where the practitioner has been appointed in respect of a partnership, it is possible that the diversification project is run as a sub-partnership where some, but not all partners participate in it. Unless a contrary intention appears, property brought with partnership money will be is deemed to be purchased on behalf of the partnership (section 21 of the Partnership Act 1890). However, where an asset is paid for by a partner

Fixture or fitting?Given the nature of an agricultural business, issues of whether an asset is a fixture or a fitting may be more prevalent.As a general rule, if an asset is fixed to the land, it forms part of the land , but it is not always that simple. The distinction is important because unless agreed otherwise, the ‘fixed’ item will become the property of the owner of the land, and therefore part of any security held over that land. If it does not meet the criteria, it will be a chattel and therefore fall outside of a mortgage or fixed charge over the land—the chattel may form part of any agricultural fixed or floating charge, or any non-agricultural floating charge. This is also relevant in the context of landlord and tenant.In terms of buildings, the issue will be whether it forms part and parcel of the land or not. For example, a chalet that could not be moved without it being in effect

Many agricultural products require certain documentation or processes to follow in order to sell them. Not only legal requirements as to traceability, welfare, and food safety, but also under certain assurance schemes. If the business sells to a supermarket of wholesaler, they too will have their own requirements set out in the contract between them. Therefore, the practitioner will need to be aware that sales of agricultural produce are not necessarily simple or straightforward.Timing of realisationDue to the nature of agriculture, (ie things grow and need varying degrees of feeding, watering, and other intervention), when to realise is of greater importance than how. For example, bringing livestock to weight/maturity, movement restrictions on livestock to control disease (such as tuberculosis and avian flue), or a crop to harvestable condition.On the other side, fresh produce such as meat, fruit and vegetable will perish and be unsaleable if not dealt with promptly. Under section 166(3) of the Insolvency Act 1986 (IA 1986), a liquidator in a creditors’ voluntary

This Checklist discusses some issues that will be relevant for an agricultural insolvency such as business structure, land, livestock, environmental considerations, security, firearms, vehicles, dairy, arable farm produce, seed stock, and food and drink, and is intended to sit alongside any general checklist that practitioners may utilise for such insolvencies.Structure of the businessMany agricultural businesses are run as general unincorporated partnerships by family members rather than through limited companies or limited liability partnerships.If the practitioner has been appointed over a partnership:•is there a partnership deed? In the absence of a partnership deed with a statement to the contrary, the bankruptcy of an individual partner will dissolve the partnership. This is not the position if a corporate partner is subject to liquidation or administration, unless the partnership deed specifies otherwise•who are the partners? These are the people that will be jointly liable to contribute to the debts of the partnership if the partnership assets are insufficient to pay the partnership’s debts and obligations in full•is anyone being ‘held out’ as a