High Court ruling clouds insolvency appointments

A HIGH COURT ruling has muddied the waters for insolvency practitioners on how they are appointed to a case.

The judge ruled the appointment of administrators was invalid, despite obtaining a majority vote from the board of directors.

Harris Lipman partners Martin Atkins and Freddy Khalastchi’s appointment to property investment business Minmar was revoked following a legal claim from one director who was not present at the selection meeting.

He claimed the appointment was void because he was unable to vote at the meeting and the insolvency practitioners had failed to send a letter to the company’s registered office outlining their likely appointment.

Atkins said the case highlights the need for further clarification on appointments, as the ruling was in “stark contrast” to what many administrators understood to be correct.

He commented: “It has been widely accepted by insolvency practitioners for many years now that a majority decision from the board is enough, which is what happened in our case.

“I believe further clarification is needed because of the implications for future insolvency cases. Certainly, this is the first time we have ever seen this issue raised.”

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