Juxta Base was a development company with a 999-year lease on a property in London used as a gastro and music bar by Instant Karma, a connected company with a sublease on a peppercorn rent. The lease was security to a bank that had provided funds for the lease purchase as part of a complex transaction with a non-connected party to develop 9 high value residencies partly on the bar’s carpark. That non-connected party went into receivership and the receiver at the instruction of its secured lender built out the residencies but without the high-level noise insulation required by the music bar in the planning approval and regulations. The noise level would have forced an injunction on the music bar which would have made it unviable without significant extra investment. In the impasse and delays Juxta Base’s bank appointed a receiver to sell the lease to recover its loan, which threatened the survival of Instant Karma as a gastro pub and music bar. BM&T were at this point appointed advisers to Juxta base and Instant Karma to help prevent the insolvency of Instant Karma and save the business for its client.
Both receivers were hostile to Juxta Base and Instant Karma and were cooperating in challenging the peppercorn rent and the acceptable level of noise to force the closure of the bar to enable the 9 properties to be sold. BM&T had professional sound testing to prove the excessive noise level and defended the validity of the Instant Karma peppercorn lease thus forcing these parties to compromise. The 999-year lease and the residencies were sold to property management company who paid sufficient funds to Instant Karma to renegotiate the lease in return for capital to invest in the gastro pub. As part of the deal the other receiver contributed to reworking the noise insulation to a satisfactory level allowing the residencies to be sold at a level that fully repaid their funder. Whilst the owner of Juxta Base lost the ownership of the 999-year lease he exited with a refurbished and profitable gastro pub and music bar. BM&T also helped him secure a substantial claim from the insurers of his lawyers. whose negligence had been a contributory factor in the building regulations and planning issues.
BM&T’s stakeholder management skills were central to bringing warring parties to accept a reasonable compromise to free the properties for sale at a level that repaid most of the loans and saved the Instant Karma business.