Contracting out of expense claims in administration and liquidation—the position under the Insolvency (England and Wales) Rules 2016
Produced in partnership with Matthew Thorn of Norton Rose Fulbright Canada LLP
Contracting out of expense claims in administration and liquidation—the position under the Insolvency (England and Wales) Rules 2016

The following Restructuring & Insolvency guidance note Produced in partnership with Matthew Thorn of Norton Rose Fulbright Canada LLP provides comprehensive and up to date legal information covering:

  • Contracting out of expense claims in administration and liquidation—the position under the Insolvency (England and Wales) Rules 2016
  • Background to the practice of contracting out of expense claims
  • Contracting out of priority rules
  • The reasonableness of exclusion clauses
  • Ranking and provable debts
  • Use in practice and the future

From 6 April 2017, the Insolvency Rules 1986 (IR 1986), SI 1986/1925 were revoked and replaced by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024. For further reading, see: The Insolvency (England and Wales) Rules 2016—overview. For a destination table showing how the old forms have been replaced by new forms, see: Destination table for forms under the Insolvency (England and Wales) Rules 2016 [Archived].

It has long been standard practice for administrators and liquidators to seek to limit their liability when entering into contracts on behalf of a company. It is becoming more common for office-holders to also seek to contract that any liabilities incurred by them in relation to that contract will not constitute expenses of an administration or a liquidation given priority over other creditors on distribution.

This Practice Note covers the use of such exclusion clauses—reviewing the background to the practice of contracting out of expense claims, the issues that arise in such practice and matters to be considered by counterparties in agreeing such clauses. For a detailed analysis of the law in this area, see: Hamish Anderson, Contracting out of expense claims in administration and liquidation: Journal of International Banking and Financial Law (2014) 3 JIBFL 154.

Background to the practice of contracting out of expense claims

In the course of an administration or