High Court changes the playing field on mis-selling for companies in administration

High Court changes the playing field on mis-selling for companies in administration

Does a recent High Court judgment force the hand of administrators to either pursue a claim for mis-selling or assign the claim to a willing creditor?

Original news

Hockin and others v Marsden and others [2014] EWHC 763 (Ch)

The High Court has ordered a company in administration to assign its claim for the mis-selling of an interest rate swap agreement to a creditor under the Insolvency Act 1986, Sch B1, para 74 (IA 1986).

How did the issue arise in this case?

The application before the court concerned a company, London & Westcountry Estates Limited (LWE), which is now in administration. The applicants in this case were The Hockin Dinamic Group Limited, the holding company of LWE and Mr and Mrs Hockin who were the shareholders of The Hockin Dinamic Group Limited as well as directors of LWE.

It is claimed by the applicants that LWE's failure was the fault of the banks (The Royal Bank of Scotland (RBS) and National Westminster Bank) who were responsible for funding its operations and focuses specifically on the mis-selling of an interest swap agreement entered into by LWE in July 2008. The administrators of LWE had decided that they did not wish to pursue the claims. The applicants applied to an order under IA1986, Sch B1, para 74 to assign the claims to them.

What are the relevant statutory provisions?

The application was made under IA 1986, Sch B1, para 74(1) which reads:

'A creditor or member of a company in administration may apply to court claiming that:

  1. the administrator is acting or has acted so as unfairly to harm the interests of the applicant (whether alone or in common with some or all other members or creditors), or
  2. the administrators proposes to act in a way which would unfairly harm the interests of the applicant (whether alone or in common with some or all other members or creditors).'

On an application under IA 1986, Sch B1, para 74, the court may make any order it thinks fit, including an order requiring an administrator to do or not do a specified thing. In the current case, the court considered it did have jurisdiction to direct the assignment of a claim pursuant to

Subscription Form

Related Articles:
Latest Articles:

Already a subscriber? Login
RELX (UK) Limited, trading as LexisNexis, and our LexisNexis Legal & Professional group companies will contact you to confirm your email address. You can manage your communication preferences via our Preference Centre. You can learn more about how we handle your personal data and your rights by reviewing our  Privacy Policy.

Access this article and thousands of others like it free by subscribing to our blog.

Read full article

Already a subscriber? Login