In Finnerty v Clark the appellants were the sole shareholders and substantial unsecured creditors of St George's Property Services (London) Ltd (St George). The respondents were administrators of St George. The High Court decision was reviewed in our December 2010 insolvency legal update.
The appellants sought an order under the UK Insolvency Act that the administrators be removed because they refused to challenge the default rate of the loan to St George. The appellants believed that the default rate on the loan was an unenforceable penalty or an extortionate credit transaction.
The Court of Appeal refused to remove the administrators. It held that the administrators acted independently and there were no grounds for criticising their decision not to initiate proceedings. The Court noted that the fact that a different administrator may have come to a different decision was not a sufficient ground for removal of an administrator.
See Court decision here.