Administrators entitled to rely on settlement agreement they were not a party to

The administrators were appointed by Barclays Bank. The companies came out of administration through a CVA and executive control of the companies returned to the directors. The companies issued proceedings against the bank, which were compromised through a settlement agreement (the “Agreement”).

The companies’ contributories then brought a misfeasance claim against the administrators and their solicitors alleging misfeasance and negligence respectively in relation, amongst other things, to not pursuing mis-selling and other claims against the bank. As the misfeasance claim was issued after the administrators had been released from office, the claimants had to seek permission, which the former administrators unsuccessfully applied to oppose. However, the former administrators only subsequently became aware of the Agreement. Both the former administrators and the solicitors therefore applied to strike out the proceedings contending that were entitled to enforce the terms of the Agreement, which related to similar claims, as “Parties" and “Affiliates” as defined in the Agreement, even though they were not parties to it.

The judge considered the Agreement in detail and held that the former administrators did come within the relevant definitions as former agents of the companies and were therefore entitled to rely on the settlement terms, which settled the claims which formed the basis of the proceedings against them. The misfeasance proceedings were therefore struck out. However, the judge allowed certain claims to continue against the solicitors.

Re A Company [2021] EWHC 2289 (Ch)

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