Key point

Only a current liquidator or a current creditor has standing in an English liquidation to pursue a claim under  section 212 of the Insolvency Act 1986 ("IA 86"). A former liquidator has no standing to apply to court to expunge a proof of debt (Insolvency Rule 4.85).

The facts

Two creditors ("A") had applied, under S.212 IA 86, for an order that the former liquidator ("R") of Mama Milla Limited (In liquidation) repay to that company sums allegedly misapplied by R. Two weeks prior to trial R applied to adjourn it, so as to permit her to apply for an order that the A were not creditors (reversing an earlier application compromised by a consent order (the "Consent Order")). If A were not creditors, it would remove A's ability to continue the S.212 action against R.

The decision

R argued that her standing derived from being a party to the Consent Order (which she now alleged was procured by a fraudulent misrepresentation from A). However, the court held that Insolvency Rule 4.85 limited the jurisdiction of the Court to hearing such applications from the current liquidator(s) or creditor(s). R was neither at the time of the current application.

Comment

The late application to adjourn appeared tactical, and so the result is not surprising. The Judge also decided that, in light of Mitchell v. News Group Newspapers Ltd, R's application should be barred on procedural grounds as it would require adjournment of the S.212 IA 86 trial. Proceeding with the trial (of the S.212 action) outweighed R's desire to raise a fraud challenge to the Consent Order.

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