Q&As

A company sent client money to a third party who had the contractual right to set off their fees from that money. The company subsequently went into administration. The third party deducted their fees and returned to the administrator the balance of the monies they held. Is it arguable that, following administration, the monies (in full) should have been repaid to the company as company property, with the third party being treated as an unsecured creditor of the company in respect of their fees?

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Published on LexisPSL on 01/04/2020

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • A company sent client money to a third party who had the contractual right to set off their fees from that money. The company subsequently went into administration. The third party deducted their fees and returned to the administrator the balance of the monies they held. Is it arguable that, following administration, the monies (in full) should have been repaid to the company as company property, with the third party being treated as an unsecured creditor of the company in respect of their fees?

We assume for the purpose of this response that by ‘client money’, it does not mean that the money was held under a trust for the company's client.

When a company goes into administration, its assets fall to be distributed under the statutory waterfall of payments—see Practice Note: Waterfall of payments in administration—the position under the Insolvency (England and Wales) Rules 2016. Administration se

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