Author
Nick Moser

Nick Moser

Partner

Read More
Author
Nick Moser

Nick Moser

Partner

Read More

7 January 2021

R&I update - January 2021 – 1 of 4 Insights

English High Court provides clarity for assignees of insolvency claims

  • Quick read

In Cage Consultants Limited v Iqbal & Iqbal [2020] EWHC 2917 (Ch), the liquidators of Totalbrand Limited (the company) assigned certain claims – including for transactions at an undervalue and preferences – to litigation funders Cage Consultants Limited (CCL) under s.246ZD Insolvency Act 1986. The company was subsequently dissolved.

A former director of the company and another individual alleged to have benefitted from the transactions tried to strike out the claims. They did this on the basis that:

  • s.246ZD does not give an assignee sole entitlement to the proceeds, and
  • the proceedings had to provide for payment to be made to the assets of the insolvent company for the benefit of its creditors, which could not happen until the company was restored to the register of companies.

The decision 

The Court refused to strike out the claims, because:

  • the wording of s.246ZD(2) clearly permits the assignment of the right of action "including the proceeds of an action"
  • the creditors would not be deprived of any benefit as the assignee will have paid a price to "purchase" the claim which benefits the creditors of the company
  • for s.246ZD(2) to be given any practical meaning, you should notionally add words to the provisions of the Insolvency Act that create the claims being assigned so that there is no ongoing role for the assignor, which should not be kept "artificially alive" for the purpose.

Find out more

This case provides welcome clarity and reassurance to purchasers of insolvency office holders' claims. To discuss claims like this in more detail, please reach out to a member of our Restructuring & Insolvency team.

Call To Action Arrow Image

Latest insights in your inbox

Subscribe to newsletters on topics relevant to you.

Subscribe
Subscribe

Related Insights

2012-000731 BANR TW Website ARTICLE THUMBNAIL Pension report
Pensions insolvency

Pensions in Restructuring Survey – our analysis

14 January 2021
Quick read

by Mark Smith and Nick Moser

Click here to find out more
Fountain pen close up on peach coloured background
Restructuring & insolvency

Lenders – remember to obtain all necessary consents before taking enforcement action

7 January 2021
Quick read

by Nick Moser

Click here to find out more
Meeting in conference room
Restructuring & insolvency

Reintroduction of UK tax authority preferential claim – how could it affect you?

10 December 2020
Quick read

by Nick Moser

Click here to find out more