Court provides clarity on assignment of insolvency claims

Mills & Reeve act for Cage Consultants Limited in bringing claims under the Insolvency Act 1986 following an assignment of claims by the company’s liquidators.

The Respondents sought to strike out the claims on the basis that the relevant statutory provisions only allow for assignment of claims by insolvency office holders, but that the fruits of the action must be paid to the company or liquidator before being distributed. The company had in this case been dissolved.

Mr Justice Snowden’s judgment on permission to appeal confirms for the first time that both office holder claims and the fruits of those actions are assignable by virtue of s.246ZD of the Insolvency Act 1986. The relevant provisions must be read purposively, allowing a court to make an order for payment to a third party assignee. 

The decision applies a common sense approach which will provide comfort to the growing market for the purchase of insolvency claims.

Cage Consultants Ltd v Iqbal (Re Totalbrand Ltd) [2020] EWHC 2917 (Ch)

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