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United Kingdom Insolvency Claims And Who To Assign Them To – The National Law Review
It is often the case, that insolvency claims are pursued against former directors of the insolvent company or persons connected to them. It is also often the case, that such claims are assigned to a litigation funding company given lack of funds in the insolvent estate to pursue them. This is what happened in Lock v Stanley where various claims against the former directors, their parents and connected company were assigned to Manolete.
The decision of the Court of Appeal in Lock v Stanley provides comfort to assignees of insolvency claims that defendants will not be able to avoid claims by seeking to attack the assignment where their interest is self-serving, and that liquidators are not obliged to offer to assign an insolvency claim to a proposed defendant.
It also reminds liquidators that although s168(5) of the Insolvency Act 1986 (“Act”) allows aggrieved persons to challenge their decisions, unless the applicant has a legitimate interest and there will be a benefit to creditors as a whole in reversing or modifying the liquidator’s decision, an applicant is unlikely to have standing to challenge.
Proceedings were issued by Manolete against the former director Mrs Lock and other family members, and listed for trial in December 2021, but Mrs Lock sought to set aside the assignment to Manolete on the basis that she and her family were not given an opportunity to purchase the claims against them.
The claims alleged transactions at undervalue, misfeasance and preference to the tune of £1.2m, which, if successful were estimated to see a return to the insolvency estate of c£800,000.
Mrs Lock had suggested in an early meeting that she might be interested in buying the claims, but (1) she did not follow this up, (2) was aware of the liquidator’s intention to litigate against her parents (even if not her at that point), (3) the intention to assign the claims to a litigation funder and (4) there was no reason to think that Mrs Lock or her parents could offer a better deal.
Section 168(5) of the Act enables a creditor, debtor or other aggrieved person to challenge an act or decision of a liquidator, which the court can then confirm, reverse or modify. Mrs Lock was also a creditor of the insolvent company, so it was on this basis, that she relied on s168(5) and sought to set aside the liquidator’s assignment of the claims.
Although Mrs Lock was a creditor, the Court of Appeal confirmed the approach taken in previous authorities that being a creditor is not on its own sufficient to apply for relief under s168(5), an applicant must also have “a legitimate interest in the relief sought”.
What it is not, is where the applicant’s interest is adverse to the liquidation and the interests of creditors.
In this case, Mrs Lock could not act as both creditor and defendant because on the one hand as a creditor she had an interest in the claims being upheld and turned into as much money as possible, whereas wearing her other hat as defendant, her interest was to defend the claim and pay as little as possible.
Mrs Lock’s interests were not therefore aligned with the interests of creditors generally, which were to maximise the recovery to the estate and as such, she did not have a legitimate interest in the relief sought. Mrs Lock’s interest was to protect herself and her family from the claims being pursued. In light of this, the court at first instance had held that Mrs Lock did not have standing to make the application, and the Court of Appeal up held this on appeal.
It is clear from cases such as Re Edennote that an outsider to the liquidation has no standing to bring proceedings under s168(5). For others (creditors, debtors or aggrieved persons), they do, but relief must be in the interests of all creditors, and not for other motivation or reason. This will of course be a question of fact, but if an aggrieved person is seeking to protect, prevent or otherwise advance the interests of others (not creditors) then a court is likely to find that they do not have standing to challenge the act or decision of a liquidator in the first instance.
Even if someone has standing to challenge a decision, the court, as also confirmed in Lock v Stanley that it will rarely interfere with that decision unless it is perverse i.e. it was unreasonable and no other liquidator would have made that decision.
In this case, the fact that Mrs Lock (amongst other things) never followed up her suggestion to buy the claims, was aware of the pending litigation and no offer was on the table meant that the liquidator’s decision to assign the claims to Manolete was not perverse.
The Court of Appeal said it may be sensible or good practice, but office holders are not under a duty to do so and failure to give a defendant an opportunity to acquire a claim is not necessarily wrong. That said, office holders should consider the position carefully, because if a defendant is in a position to propose a better deal, failing to properly explore that option could leave the office holder’s decision open to challenge.
Sensibly, therefore, officer holders should explore the possibility that a defendant might be willing to make a better offer in return for the claims being assigned. However, whether an offer is better is a bit more tricky to judge. For example, an offer that proposes a lower payment but which removes the litigation risk of pursuing the claim could, in some cases be better.
About this Author
Rachael Markham is the professional support lawyer providing national and global support to the Restructuring & Insolvency team.
Rachael is responsible for precedents and know-how, organising and presenting internal and external training, responding to bespoke research enquiries, drafting and editing the restructuring and insolvency blog, producing articles for journals, providing support for BD projects, marketing and pitches, and producing a weekly bulletin on technical and practical issues that affect the Restructuring & Insolvency team.
Rachael is a member of the…
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Tattoo Artist, Entrepreneur, and Oil Painter Kirby van Beek Makes a Mark in the Industry
Kirby van Beek, a talented tattoo artist, entrepreneur, and oil painter, has emerged as a prominent figure in the world of tattooing, showcasing his expertise in black and grey realism. Known for his distinctive designs and captivating portraits with a dark twist, Kirby has established himself as a highly regarded artist, earning recognition both locally and internationally.
Kirby’s journey as a tattoo artist began at the age of 18 when he taught himself the art form while simultaneously pursuing his education in forensic science. During this time, he displayed unparalleled dedication, working at a morgue during the week and honing his tattooing skills during weekends and spare hours. Kirby’s passion for tattooing led him to work at various tattoo studios in the Netherlands, solidifying his experience and expertise in the field.
About Kirby van Beek:
Kirby van Beek is a talented tattoo artist, entrepreneur, and oil painter based in [City]. Renowned for his expertise in black and grey realism, Kirby’s distinctive designs and captivating portraits with a dark twist have earned him a prominent position in the industry. With a passion for tattooing and oil painting, Kirby aspires to become a globally recognized artist, leaving a lasting impact on the world of art.
«The things I love most about tattooing is meeting different clients and getting to know them on a personal level during a long tattoo session,» says Kirby. «There is nothing more rewarding than tattooing individuals who appreciate my art so much that they choose to wear it on their skin for life.»
Specializing in realistic black and grey tattoos, portrait tattoos, and horror tattoos, Kirby’s work has garnered attention both nationally and internationally. His talents have been showcased at several tattoo conventions abroad, and his captivating designs have been featured in prominent tattoo magazines. Additionally, he has been recognized by esteemed publications such as LINDA magazine in the Netherlands and the local newspaper BN de Stem. Furthermore, Kirby’s exceptional skills led him to participate as a tattoo artist in the Dutch version of MTV’s Just Tattoo of Us.
Looking ahead, Kirby aspires to become a world-renowned tattoo artist and oil painter, with a particular focus on portrait tattoos and dark horror tattoos.
His ultimate goal is to reach clients and famous individuals around the globe, sharing his unique artistry and leaving an indelible mark on the industry. In the future, Kirby envisions opening an art show to showcase his diverse body of work.
To learn more about Kirby van Beek and explore his captivating portfolio, visit his official Instagram page (@kirbyvanbeek) or his website www.the-continental.nl.
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DJ Khenya Takes Center Stage at Blue Marlin Ibiza, Spreading Joy and Connection
The music of DJ Khenya pulsates with rhythm and emotion. A rich mélange of sun-kissed sounds that blend percussive beats with indie and deep house. The artist’s journey to Ibiza has laid the foundation for a musical expression that communicates joy and connectivity. Taking the reins at Blue Marlin Ibiza, Khenya’s vibrations will inspire dance floor dreamers to move and let go.
From the stage at Blue Marlin Ibiza, DJ Khenya has shared experiences alongside some of the most influential names in the music industry. When asked about the impact of these experiences, the artist responded humbly: «The truth is I feel lucky. I have total admiration for them as they are a source of inspiration for me.»
The energy at Blue Marlin Ibiza is unlike any other, according to DJ Khenya. He describes the place as «a life experience,» synonymous with summer and with all the ingredients to feel in a state of bliss when you’re there. He thanks the team for being like a family to him and for everything they’ve done.
This summer, DJ Khenya will take his audience on a journey filled with unforgettable emotions. He comments, «My goal is to transmit uplifting and unforgettable sensations. My audience is what sets my heart on fire, and I want them to feel my desire to make them dance.»
The path that led DJ Khenya to become a DJ began in Havacia, Cuba, where he grew up in an environment where rhythm, dance, and poetry are like the air we breathe. With son and salsa running through his veins, his first experience at an electronic music party in the early 2000s marked a shift in his life. Khenya recalls hearing ‘The Underground’ by Celeda and says, «It was a different Cuba, and I loved it. I think from that moment, something changed inside me. A seed had been planted, and life would take me in that direction.»
Having traveled the world and now based in Ibiza, DJ Khenya reflects on how these experiences have shaped his identity as an artist. He comments, «Traveling the world is a privilege that every human being should have, especially an artist because when you have these experiences, you can understand different ways of life and the musicality of each place. Creativity is born from that knowledge, and I still have a lot to learn in that sense.»
This summer, DJ Khenya promises to take Blue Marlin Ibiza to new heights with his unique music and his desire to make everyone dance. The experience is guaranteed to be a celebration of life, joy, and connection through music.
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Oliver Rouz: Weaving Ink and Inspiration into a Legacy
Born on February 13th, 1988, Oliver Rouz’s path to success is one marked by determination, passion, and the pursuit of creative endeavors. From a young age, Oliver exhibited a profound love for various forms of creativity, which ultimately led him to become one of the country’s most celebrated tattoo artists.
During his school years, Oliver’s artistic talent set him apart. His favorite cartoon characters became his canvas as he tirelessly recreated them in his own style. However, drawing was merely a pastime during his teenage years, a source of pleasure until music took center stage in his life.
In 2005, Oliver formed the «Fairy Tale Jelissa Rose» band, a pivotal moment that expanded his horizons. Immersed in the music community, he developed a newfound fascination with tattoos and ink artistry, spurred by the band’s association with the tattoo culture.
A serendipitous encounter with Artem at the «Quick Silver» shop in Moscow in 2010 marked a turning point. Artem’s influence led Oliver to consider a life-altering decision. By 2012, Oliver, now ignited by a passion for tattoos, made a bold move to another city, all while nurturing his tattoo aspirations.
Artem’s transformation into a tattoo artist himself inspired Oliver further. As fate would have it, an opportunity arose in 2012 for them to collaborate and open their tattoo studio in Moscow. This venture required Oliver’s dedicated efforts, alongside his commitment to saving funds to fuel their creative endeavor.
Oliver’s tattooing prowess flourished within a year, prompting a return to his hometown to establish several home-like studios. Yet, he recognized that true growth beckoned him back to Moscow. Thus, in 2017, he joined Good Hands Tattoo, laying the foundation for his continued ascent.
Oliver’s indomitable spirit and devotion to his craft bore fruit, as evidenced by his stint at Black Point studio, born out of a collective dream. His trajectory exemplifies the power of dedication, leading him to become a recognized tattoo luminary within the nation.
Oliver’s journey, however, extends beyond tattooing. From his early affinity for music, highlighted by the formation of his punk rock band at 14, to his involvement in the music industry and flirtation with global recognition, his story embodies the resilience required to navigate creative industries.
A pivotal moment arrived in 2021 when Oliver, undeterred by previous setbacks, chose to channel his creative energy into designing game art. Leaving behind a stable job, he invested his savings of around $5,000 to embark on a transformative journey. Guided by Hexeth’s interview and tutorials, Oliver delved into the realm of game design.
Fueled by dedication and a newfound purpose, Oliver’s creative expression culminated in designing elements for popular games like CS:GO and RUST. Through unwavering commitment and rigorous self-education, he harnessed the potential of his artistic flair.
Today, Oliver Rouz’s name resonates as a testament to the potential of human determination. His path from a young artist with a penchant for creation to a revered tattoo and game artist serves as an inspiration to countless dreamers. Oliver’s legacy continues to evolve, as he pushes the boundaries of his craft and inspires others to chase their passions unrelentingly.
For more information and to view Oliver’s work, visit his Instagram profile: @oliverrouz.
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