Argentex: closing out contracts does not create super priority administration claims

The English High Court has given guidance on when liabilities become 'super-priority' expenses under the Lundy Granite principle, which treats pre-insolvency liabilities as expenses of the insolvency process where the officeholder retains property for the estate's benefit. 

Background 

Argentex LLP, an e-money institution specialising in payment and foreign exchange services was placed into special administration on 21 July 2025.

The Joint Special Administrators (JSAs) wanted to close out customer contracts to crystallise 'in the money' claims against Argentex and pursue any debts from 'out of the money' claims to achieve a return for creditors and certainty for all. The JSAs sought directions on whether their actions (or inaction) would incur liability as an expense of the special administration.

Decision

The Court held that the JSAs will not incur a liability as an expense of the special administration by: 

• Doing nothing in relation to the contracts as they reach maturity 
  Inaction does not convert liabilities into special administration expenses under the Lundy Granite principle. There must be some conduct which could be treated as an election or regarded as a choice. 
• Closing out the contracts and enforcing the debts due
  Viewed objectively, the action of closing out under the terms of the contract is not a benefit to the administration estate under the Lundy Granite principle. Therefore, closing out the contracts does not create a super priority expense claim for unsecured creditors with 'in the money' claims.

Find out more 

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring and Insolvency team. 

Conway and others (in their capacity as Joint Special Administrators of Argentex LLP (in Special Administration)) v Plass and others [2025] EWHC 2625 (Ch)