A disappointed bidder for an asset in a liquidation will only have standing to complain in the insolvency if they are a creditor or contributory

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In Re Stay In Style, the trustees of a family trust sought to set aside a sale of a cottage by the liquidator of the partnership. He had sold the cottage to the trustee in bankruptcy of the partners who had then sold it on to an unconnected party. The cottage was lived in by the trustees’ son and it was occasionally used as an overflow home.

Although complaints were raised about the handling of the bidding process, the very fact that something may have gone wrong, or that the challengers were disappointed with its outcome did not entitle them to challenge the liquidator – the Court of Appeal had already established that a challenge to a liquidator’s decision under Section 168 Insolvency Act 1986 was only available to a creditor or a contributory and the trustees were neither.

This is a useful reminder of who can challenge decisions made by liquidators – although the fact that a claim was not available through this route would not necessary prevent some other common law claim, such as breach of some express or implied contract which may have arisen through any bidding process.    

In The Matter of Stay in Style (In Liquidation) [2020] EWHC 538

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