You have won a big prize on the National Lottery.  No sooner have you received the money than you discover from a good friend that his business is experiencing some financial difficulties.  Key to his survival is the purchase of a particular business machine.  You believe him and decide to help him out.  You pay a cheque into the company’s bank account.  Before the machine is purchased the company falls over and an administrator is appointed.  The administrator says that the money in the company’s bank account should be available for payment of all creditors of the company whereas you think this is unfair and would like it back.  You express the view that, because the money that you paid to the company was not, in fact, used for the purpose of purchasing the machine, it would only be fair for it to be returned to you.

A case, very similar to this, actually happened.

If you can work out the principles which would resolve the issue in this scenario you are quite a long way to sorting out a solution for the tenants’ deposits held by pub companies.

Our previous article, which was triggered by concern in the media over the deposits from tenants held by the Punch Group, provoked a lot of interest. Comments received ranged from, at one extreme, those in favour of maintaining the status quo (it was actually suggested by one person that the money might be safer with pub companies than the banks!) to those who consider it to be morally reprehensible that a pub company can really use tenants’ deposits as a cheap form of financing.  Several points have emerged from this:

  • As will be seen from the case above, the issue is who the deposits actually belong to.  Although removing a tenant’s deposit from the pub company’s current account and placing it in, for example, an account with a firm of solicitors, or even into a separate account at, say, a building society is unquestionably a step in the right direction it is not a complete solution in that it does not, by itself, specifically identify who the real owner of the deposits is.
  • Press reports in relation to Punch are slightly confused and, as noted in the previous article, there seemed to be some elements of confusion between administrative receivership and administration (these are not the same thing).  One possible answer to this may be that the deposits held for tenants of outlets which are in the securitisation vehicles may not be held by the securitisation vehicles themselves but may be held by Punch for them.  It must, obviously, follow that if administrative receivership is a possibility for the securitisation vehicles – as press reports have suggested – the question would be how the administrative receiver of a securitisation vehicle is able to recover or deal with the tenants’ deposits when they are held by Punch.
  • It is not really an option for the status quo to continue. This controversy almost certainly guarantees a statutory code of practice – if only to ensure tenant’s deposits are safeguarded. It cannot be in anyone’s interest for tenants deposits to be put at risk in this way and the Government will likely consider the moral case for safeguarding tenant’s deposits unanswerable.
  • We will continue to provide commentary on this point as more news unfolds.

    Please note that the authors do not act for or advise Punch and do not know anything of the affairs of Punch beyond what they have read in the press.


    To read our previous article, ‘Punch and the tenants’ deposits’, please click here.

    This article was written by Peter Holden with contributions fromChristopher Ainsworth and Leo Skinner. To view their biographies, please click on the names below.





    Peter Holden                       Christopher Ainsworth           Leo Skinner

    The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.