Resolving the rules of insolvency—Re Kingstons Investments Ltd

Resolving the rules of insolvency—Re Kingstons Investments Ltd

In what ways has Re Kingstons Investments Ltd shed light on long-standing ambiguities in the Insolvency Rules 1986? Jamie Riley, commercial litigator at 11 Stone Buildings, explores the case and explains why the final decision will be so important for insolvency lawyers.

Original news

Re Kingstons Investments Ltd (in Creditors’ Voluntary Liquidation); subnom Adlon Ltd v Sale (as Liquidator of Kingstons Investments Ltd) and another [2015] EWHC 1619 (Ch), [2015] All ER (D) 122 (Jun)

The proceedings concerned a company in creditors’ voluntary liquidation.

The applicant creditor of the company applied for an order, under rule 4.70(2) of the Insolvency Rules 1986, SI 1986/1925 (IR 1986), varying or setting aside the decision of the first respondent liquidator and chairman at a meeting of the company’s creditors to admit the applicant as a creditor for voting purposes for a lower sum than the applicant contended should have been admitted, with the result that a resolution for the appointment of a joint administrator was defeated.

The Companies Court, in allowing the application, held that the first respondent liquidator had erred in treating a liquidated claim (the moiety) as an unliquidated claim and in the application of the rules. The moiety claim was a provable debt under the rules and the applicant had, on the evidence, established its claim. It had not been open to the respondents to use a sum by way of set off against the moiety claim.

What were the facts of the case?

The applicant, Adlon, is a construction contractor that entered into a joint contract tribunal (JCT) contract with Kingstons Investments Ltd (the company) for the design and construction of a commercial and residential development. A dispute arose between the parties when the company defaulted in making interim payments in respect of certified sums following practical completion. The matter was referred to adjudication, by which time most of the development had

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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.