Office-holders must make their own decisions—Parker v Nicholson

Office-holders must make their own decisions—Parker v Nicholson

Christopher Burt, solicitor at Moon Beever, considers the recent High Court decision in Parker v Nicholson and others clarifying an office-holder’s right to delegate decision making.

Original news

Parker v Nicholson and others [2015] EWHC 3881 (Ch), [2015] All ER (D) 278 (Nov)

The Bankruptcy High Court dismissed an application for directions made by the applicant trustee, P, as to whether to admit a proof of debt filed by the respondent liquidators and whether a meeting of creditors should be convened at the liquidators' request. P's role was to make hard decisions such as the one in the present case. Such applications were to be discouraged.

What issues did this case raise?

Insolvency practitioners are routinely required to make difficult decisions in their insolvent estates. One of the perennial challenges is the adjudication of creditor claims when hotly contested by the underlying insolvent party and his/her/its creditors. Office-holders find themselves in an uncomfortable position and there is naturally some attraction in delegating contentious adjudications to third parties, such as the court. The Insolvency Act 1986 (IA 1986) provides that office-holders may apply to court for directions on matters arising in their estates. The key question in this case was to what extent can an office-holder refuse to make a decision—in particular adjudicating on a proof of debt—but instead to refer the matter to the court?

What were the key facts of this case?

Mr Parker was appointed trustee in bankruptcy of Michael Paul Chinn with effect from 3 December 2014. The trustee proceeded to investigate the affairs of the bankrupt, instruct solicitors and begin asset realisation work. However he did not adjudicate—not even for voting purposes—on the proofs of debt that had been filed with him. The most substantial of these proofs was from the liquidators of one of the bankrupt’s former companies in the sum of £4.4m.

Correspondence commenced and the joint

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.