Q&As

If a company is 'merely' in liquidation (ie a CVL) would this: (i) mean we can still issue against the insured under the Third Parties (Right Against Insurers) Act 1930 (prior to it being dissolved), obtain judgement and then go against the insurer, (ii) prevent the company being dissolved until the judgment has been received so we can go against the insurer to recover the money?

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Produced in partnership with Carly Schiff of Boyes Turner
Published on LexisPSL on 22/06/2016

The following Restructuring & Insolvency Q&A Produced in partnership with Carly Schiff of Boyes Turner provides comprehensive and up to date legal information covering:

  • If a company is 'merely' in liquidation (ie a CVL) would this: (i) mean we can still issue against the insured under the Third Parties (Right Against Insurers) Act 1930 (prior to it being dissolved), obtain judgement and then go against the insurer, (ii) prevent the company being dissolved until the judgment has been received so we can go against the insurer to recover the money?

We have limited this Q&A to cover litigation against a company in Creditors' voluntary liquidation (CVL).

Where a company is in CVL there is no automatic stay of proceedings and accordingly, you can issue proceedings against the insured company (without seeking consent or a lift of stay) in order to obtain judgement and seek enforcement against the insurer. However, the court has discretion to order a stay of proceedings should the proposed litigation have a negative impact on the general body of creditors. In such circumstances, the burden is on the liquidator to persuade the court that a stay should be granted (see Re Keynsham Co (1863) 33 Beav 123, 9 Jur NS

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