Limited standing to attack decisions of insolvency officeholders (Re Stay in Style)

Limited standing to attack decisions of insolvency officeholders (Re Stay in Style)

In two related judgments, the High Court has affirmed that standing to attack the decisions of liquidators and trustees in bankruptcy is largely limited to creditors, contributories, and bankrupts where there is likely to be a surplus in the estate. The court struck out challenges brought by former bankrupts who had bid for property for lack of standing. In so doing, it rejected a wide range of arguments as to how a legitimate interest (and standing to challenge) could arise. The decisions serve as a useful reminder that the requirements for standing are construed narrowly. Practitioners may find it interesting that the court expressly rejected an argument based on natural justice and reiterated that those aggrieved by faulty bidding processes must rely on existing common law remedies. Written by Judy Fu, barrister at 3 Verulam Buildings.

Re Stay in Style (in liquidation) and others [2020] EWHC 537 (Ch)

Re Stay in Style (in liquidation) and others [2020] EWHC 538 (Ch)

What are the practical implications of these judgments?

It is well-established that the courts are generally unwilling to interfere with the administrative and commercial decisions taken by insolvency officeholders, save in cases of fraud or bad faith.

It is also clear that only those with a direct interest in the insolvency process has standing to apply to the court to interfere with the decisions of officeholders.

These judgments provide a useful illustration of those principles: practitioners should bear in mind that unless the applicant is a creditor or contributory, or (in the case of bankrupts) there is likely to be a surplus in the bankrupt estate, applicants are likely to face difficulties in establishing standing to bring a challenge.

These judgments also illustrate the difficulties which can arise where an applicant takes on multiple capacities in an insolvency process.

Here, the applicants were variously former bankrupts, trustees of a family settlement which had bid on the property in issue (which had been sold by the trustee in bankruptcy and which transaction the applicants sought to attack), and fo

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

About the author:

Zahra started working as a paralegal at Lexis Nexis in Banking and Insolvency teams in April 2019. Zahra graduated with a 2.1 honours in a BA French and Spanish, completed the GDL at BPP University and is seeking some experience before commencing the LPC. She has undertaken voluntary work for law firms in London, Argentina and Colombia.