HomeFWJ TakeawayCompany rescueCompany administrationsCan a creditor sue a liquidator or an administrator for misfeasance?

It is possible under the legislation for a creditor to take such action against a liquidator or an administrator where s/he considers that they have made decisions on behalf of the company which have caused losses and for which is can be shown that such decisions caused them personal benefit or acted to misapply company assets.

However, such proceedings are rare and can only occur subject to the following circumstances:

  • the liquidator or administrator has vacated their office; and
  • the court has granted leave to bring such an application.

The purpose of the above is to ensure that creditors’ interests overall are not interfered with by a perhaps irate creditor.  

Accordingly there will be a two stage process where, once an administrator or liquidator has vacated their office, a creditor could issue an application for misfeasance but firstly the claimant would have to prove to the court that they had a reasonable prospect of success, rather than the application just being issued without good reason.

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