Decisions, decisions: Lanigan & Ors v Hyslop & Ors [2026] EWHC 128 (Ch)

Challenges to the assignment of insolvency claims are familiar territory to insolvency office-holders and litigation funders. These challenges rarely go beyond pre-action correspondence, mostly due to the high threshold required for the Court to interfere with an office-holder’s commercial decision, in that it must be shown to be perverse.

In Lanigan v Hyslop, heard by ICC Judge Greenwood in November 2025, with judgment handed down in January 2026, the applicants sought to set aside an assignment of claims made by the joint liquidators of Styles & Wood Group Limited (“the Company”).

Background

In June 2023, the liquidators assigned certain claims to Knaresborough Investments Limited  (“KIL”), a company beneficially owned by Mr Parkin, who also beneficially owned the Company through another entity. Mr Parkin believed that he (acting via KIL) had the knowledge and resources to pursue legal proceedings against the two former directors. The claims are valued in the tens of millions of pounds and are still ongoing.

The background is complex, involving a connected group entity which had entered administration prior to the Company’s liquidation. The administrators of that entity, from the same firm as the liquidators, had previously assigned other claims to KIL. The claims assigned by the liquidators related to the actions of the directors and other parties occurring before and after the restructuring by which the Company and its connected entity were acquired by Mr Parkin.

The challenge

The challenge was brought by the two former directors who were potential defendants of the assigned claims. They applied in May 2024 to set the assignment aside insofar as it related to them.

Though they denied liability for them, the directors accepted that the claims were neither hopeless nor vexatious, so they had at least some arguable merit. Their case was that the decision to assign the claims to KIL should nevertheless be set aside because:

• the liquidators failed to give proper consideration to the claims or take any advice on their merits before assigning them;
• the liquidators failed to test the market before assigning the claims to KIL, for example by approaching other potential assignees or the directors themselves;
• the assignment placed the liquidators in a position of conflict, because other claims against the directors had been assigned to KIL by the administrators of a connected entity, and the interplay between those claims could adversely affect the potential returns from the assigned claims to the Company’s creditors; and
• the assignment was commercially flawed and unlikely to benefit creditors.

The decision

The directors first needed to establish that they had standing to bring the application under s168((5) IA 1986. To do so, they needed to establish an interest in having the assignment set aside in their capacities as creditors, or for their creditor class generally. They could not do so because although they were creditors on account of potential claims vesting in them, ICCJ Greenwood found that the application was brought in their capacity as defendants to the assigned claims, seeking to disrupt and defeat them.

Though not strictly necessary with the directors having failed to establish standing, ICCJ Greenwood held that the challenge would have failed on the substantive test, anyway. He reiterated that, in order to be set aside under s168(5) IA 1986, the office-holder’s act must be “so utterly unreasonable and absurd”, that no reasonable office-holder, properly advised, would have done it (to be judged objectively and without the benefit of hindsight)[1].

ICCJ Greenwood reached that conclusion because:

• The liquidators had no funds to investigate or take advice upon the potential claims, or any reason to believe that KIL (or anyone else) would fund them to do so;
• Conversely, KIL had funds to pursue the claims and indemnify the liquidators and the Company against adverse costs, supported by a guarantee from Mr Parkin;
• KIL had also investigated and taken legal advice on the claims, and was willing to pursue them even in light of limitation risks;
• It was reasonable for the liquidators to have assigned the claims to KIL without marketing them elsewhere because, given KIL’s background knowledge through Mr Parkin and the time and expense that it had invested so far, it was the only viable assignee. Furthermore, unlike in Re Edennote, there was no suggestion here that the directors were willing to make a competing offer;
• the alleged conflict was not caused by the assignment, but existed regardless of it; and
• The assertion that the commercial terms of the assignment were flawed was unsustainable, because there was no evidence to suggest that any better terms were available.

Summary

It’s fair to say that the applicants gave it their all in trying to set aside the assignment. Success before ICCJ Greenwood could have snuffed out substantial claims against them, possibly rendering those claims time-barred but, at the very least, incapable of being pursued by the office-holders.

However, as ICCJ Greenwood reminds us in the final paragraph of his judgment, “the test of perversity is a formidable one”.

The liquidators faced very common practical difficulties: a lack of funds to investigate and pursue claims, coupled with limitation pressures. The solution before them was a willing assignee, already familiar with the claims and prepared to pursue them immediately.

The judgment reinforces that challenges to assignments will remain difficult, both in establishing standing and in meeting the high substantive threshold.  Where applicants are both creditors and defendants, the court will scrutinise whether the challenge is genuinely motivated by creditor interest, or simply aimed at stifling the claims.

[1]  Referring to Nourse LJ’s judgment in Re Edennote at [1996] 2 BCLC 389 at 394c and 396c

Author: Andrew Murphy, Associate Director (South & Scotland)

Contact: amurphy@manolete-partners.com | 07931 318 341