When can an insolvency office-holder give a limited cross-undertaking in damages? (Hunt v Ubhi)

Table of contents

• The ‘default position’
• Justifying a departure from the ‘default position’
• What did the court decide–and what was left undecided?
• Case details

Article summary

Restructuring and Insolvency analysis: In this case, Mr Hunt had been appointed as provisional liquidator of a partnership. There was evidence that the partnership carried on a Ponzi scheme. Mr Hunt obtained freezing orders against the partners and gave a cross-undertaking in damages limited to the net realisations in the insolvent estate. The without notice injunction was continued at first instance but set aside by the Court of Appeal on the basis that the judge was wrong to accept the limited cross-undertaking in damages offered by Mr Hunt. Lord Justice Newey helpfully set out the steps which an office-holder will be expected to take before a limited cross-undertaking will be acceptable. Lord Justice Snowden raised (but did not decide) certain interesting points for the future. Written by Phillip Gale, barrister at Enterprise Chambers.