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Frances Coulson, senior partner and head of Litigation & Insolvency at Moon Beever, points out that there are many cases where insolvency office-holders are becoming trustees of funds, but there has been limited guidance until now of how the costs of administering the fund are to be assessed.
Re Total Debt Relief Ltd (in liquidation)  EWHC 2018 (Ch)
In this case, the court determined that the liquidator of Total Debt Relief Limited (TDR) held recovered client monies of TDR as trustee. There are many cases where insolvency office-holders are becoming trustees of funds, but there has been limited guidance until now of how the costs of administering the fund are to be assessed.
The court assessed the costs of the liquidator dealing with the insolvency of TDR, a regulated firm, and approved a distribution plan in respect of client monies. The liquidator’s costs and legal costs were approved as drawn, the court considering that value had been provided to the full sum claimed and could be paid as an interim distribution from client funds.
In doing so, the court recognised the often-significant cost of complex actions to recover misappropriated funds, and that it was appropriate to enter into conditional fee agreements with solicitors and counsel. This is of comfort to those insolvency professionals who take substantial risk to seek redress from wrongdoers and deprive them of the fruits of their misfeasance.
The company was incorporated in 2009 as Happy Estates Ltd and filed dormant accounts. In February 2014, two American citizens, Lawrence Kopolov and Eric Puzaizter, became secretary/shareholder and director, respectively. The company changed its name to Total Debt Relief Ltd and then carried on a regulated business, advising clients on managing their debt.
One of the methods was a form of debt management plan between the company and the client—the client making a monthly payment to TDR and TDR then paying an amount
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