Solicitors acted for a client in successful litigation on a CFA agreement that included an arbitration clause. The client entered into a funding agreement with a third party, which funded the solicitors’ costs in part. The solicitors entered into an agreement giving priority over recoveries to the funder.
Recoveries were insufficient to repay the funder in full, meaning that the solicitors’ fees and uplift were left unpaid.
The solicitors therefore applied for an administration order. Whilst the Judge held that the solicitors were a creditor who could apply for an administration order, he followed Court of Appeal authority that, where a debt is disputed and that dispute is subject to arbitration, the court should not, save in ‘wholly exceptional circumstances’ wind up a company.
The Judge held that the same principle applies to an application for an administration order. In the absence of any exceptional circumstances or evidence of other creditors, he refused to make an administration order.
Fieldfisher LLP v Pennyfeathers Limited 2016 EWHC 566 (Ch)