The English High Court in Powertrain Ltd, Re  EWHC B26 considered the issue of whether a liquidator should be authorised to effect further distributions in favour of a company's known creditors without regard to possible further claims that could emerge against the company.
The Court noted that there is a balance to be struck between the desirability of distributing assets to known creditors sooner rather than later and the potential injustice of leaving someone who has a valid claim with no effective remedy.
The Court held that the liquidator should be authorised to distribute in favour of the known creditors as:
- The known creditors had been kept out of the available money for a consider period
- Chances were remote that other creditors would come out of the woodwork (Powertrain had ceased trading more than nine years ago).
See Court decision here.