Rescue culture: MK Airlines Ltd (In Liquidation) - administration expenses, misfeasance and priority

In this article James Williams of Eversheds Sutherland examines the case of MK Airlines Ltd v Katz & Anor (Acting as Joint Liquidator of MK Airlines) [2018] EWHC 540 (Ch). In a judgment supportive of the rescue culture in English insolvency, the court reaffirms its flexible approach to the application of insolvency provisions and to look at the practical effect of transactions in relation to their impact on creditors. Key points to note include:

  • A third party injection of new funds into the administration estate used to pay a creditor outside of the statutory order does not breach the priority rules if the position of unsecured creditors is unaffected.
  • Administrators are reminded of their joint liability in the case of joint appointments, and importantly their potential for liability for the wrong doing of a joint appointee in the case that the misfeasance relates to performance of their duties and adherence to the Insolvency Rules.
  • The importance of carefully checking that settlement agreements settle the matters they are supposed to is highlighted in a passing reference in the judgment.

Click here to read the full article.

Filed Under: Case analysis , CRI

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