An insolvency practitioner (IP) can pursue a wide range of claims when appointed as the administrator or liquidator of a company. 

These include claims that already existed at the point that the company entered an insolvency process (Pre-existing Company Claims), and ones that arise on insolvency (IP Claims see below).

An IP pursues Pre-existing Company Claims as agent for and in the name of the company, and these types of claims typically include claims for debt, breach of contract, breach of duty or recovery of property.

The Insolvency Service (in reply to a letter from R3) has confirmed that it will be reframing its view of the term "creditor". This follows the cases last year of Pindar and Toogood where the court was asked to consider whether a paid secured creditor should have consented to an administration extension and therefore, in the absence of consent, whether the extensions were valid in both cases, the judges confirmed that the consent of paid secured creditors was not required.

This is the message the courts are sending to office holders seeking approval of their fees. In two recent English High Court decisions, both handed down by HHJ Cawson KC, the courts clearly expect office-holders, as fiduciaries, to produce a sufficient and proportionate level of information to justify the level of fees being claimed.

The question of whether it is competent for the court to order a retrospective administration order has been the subject of much debate before the English courts. However, until now, there have been no reported Scottish decisions dealing with the point.

Restructuring Plans (RPs)

2024 was a year of firsts for RPs, and as case law in this area continues to evolve, there is little doubt that this will carry through into 2025.

It would be remiss not to expect to see more RPs in 2025. News of Thames Water's restructuring is "splashed" all over the press and Speciality Steel's plan might see the first "cram up" of creditors, but there seems a long way to go to get creditors onside.

The below sets out key considerations when dealing with an extension of an administration at the end of the first-year anniversary.

Categorisation of a charge as fixed or floating will have a significant impact on how assets are dealt with on insolvency and creditor outcomes.

Typical fixed charge assets include land, property, shares, plant and machinery, intellectual property such as copyrights, patents and trademarks and goodwill.

Typical floating charge assets include stock and inventory, trade debtors, cash and currency, movable plant and machinery (such as vehicles), and raw materials and other consumable items used by the business.

Shareholder disputes can often be complex and emotionally charged, particularly in small or family-owned companies where personal relationships and business interests are deeply intertwined. When such disputes reach an impasse, the law provides several mechanisms for resolution. In particular, disgruntled shareholders have the ability to bring statutory based claims against the company.

Section 363(m) of the Bankruptcy Code offers powerful protection for good-faith purchasers in bankruptcy sales because it limits appellate review of an approved sale, irrespective of the legal merits of the appeal. Specifically, it provides that the reversal or modification of an order approving the sale of assets in bankruptcy does not affect the validity of the sale to a good-faith purchaser unless the party challenging the sale obtains a stay pending its appeal of the order. That is, section 363(m) renders an appeal "statutorily moot" absent a stay of the sale order.

The practice of conferring "derivative standing" on official creditors' committees or individual creditors to assert claims on behalf of a bankruptcy estate in cases where the debtor or a bankruptcy trustee is unwilling or unable to do so is well-established. However, until recently, Delaware bankruptcy courts have uniformly limited the practice in cases where applicable non-bankruptcy law provides that creditors do not have standing to bring claims on behalf of certain entities.