May 10th 2022

Manolete Bulletin

Court of Appeal Dismisses Assignment Challenge

Judgment was handed down by the Court of Appeal on 9 May 2022 in Lock v Stanley, Neutral Citation Number: [2022] EWCA Civ 626.

The Court of Appeal upheld the first instance decision of HHJ Halliwell refusing to set aside an assignment to Manolete.

It was held that the Appellant as Defendant to Manolete’s claim had no standing to challenge the assignment as her interests were not aligned with those of the creditors generally. The class interest of the creditors is for the claims to be upheld and turned into as much money as possible, but the class interest of the Defendants is to defend the claims and avoid paying as much money as possible.

The Appellant complained that the claim had been assigned to Manolete without her being given a chance to make a competing offer and it was submitted on her behalf that the liquidator was under a duty to “test the market” properly. This submission was rejected by the Court of Appeal, the liquidator was under no such duty and the assignment of the claim to Manolete was not perverse.

This is a very welcome decision for insolvency practitioners and confirms the long standing reluctance of the courts to interfere with the discretion exercised by office holders in making commercial decisions, including the assignment of claims.

The judgment also provides clarity for Defendants to assigned claims and those advising them that they should respond to an assigned claim on its merits rather than to seek to take issue with the assignment.

The full judgment can be read here.

image of Mina Halton

Mena Halton

Head of Legal, Manolete