Introduction

Amit has recently acted for an IP whose office is one of the largest appointment takers in the country. He appeared for the respondent at several hearings on an application to review a BTO.

Background

The out-going officeholder had his licence revoked by the IPA for misappropriation of monies, running to six figures, from numerous estates. This resulted in a BTO, which was granted by the Court on paper.

The ex-administrator of the company (who was rejected as liquidator of the company) applied to review the BTO in his capacity as a creditor for his time costs.

The Application

The principal basis of the application was an alleged failure by the incoming officeholder to notify the Court that he had been nominated by the out-going officeholder, which was said to have cast doubt over his impartiality.

The incoming officeholder's nomination was pursuant to the IPA giving the out-going officeholder the opportunity to select his successor. The incoming officeholder was the fourth one that was approached by the outgoing officeholder who agreed to take over a significant number of cases.

The respondent was neutral on the application, but certainly picked some holes in the applicant's arguments.

The Court was asked to determine whether in light of the objections put forward by the applicant and the facts and circumstances known to the Court at the time of the hearing of the application for the review, the Court would still have made the BTO.

The Outcome

The application gave rise to two key interesting points:

1. Is it appropriate for an out-going officeholder to nominate his successor?

First and foremost this must be a question for the IP's governing body. The Court indicated there will usually have to be further factors, rather than merely nomination, although that might be enough.

2. If the Court is satisfied that the BTO should be amended, should it only interfere with the one estate in which the applicant has an interest or the entire BTO?

The applicant creditor only has standing to ask for a review of the BTO for the estate in which it has an interest. An IP's governing body has standing to ask for a general review. The Court indicated that it has a residual discretion to review BTOs and the stance of the governing body would be a powerful factor when exercising this discretion. On this occasion, the IPA and the Insolvency Service had remained neutral.

After repeated hearings and the Court having given a clear indication on the application, it was granted by consent. There followed a contested costs hearing at which a costs order in favour of the respondent against the applicant IP personally was made.