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Insolvency litigation insurance success for a liquidator and a trustee in bankruptcy settlements

‘The Freeths Case’

Insolvency litigation insurance settlement success for liquidator

In 2019, Temple insured a liquidator in his claim against a former member of a limited liability partnership. The claim included transactions at an undervalue and breaches by the respondent of his duties owed to the LLP and the conversion of the LLP’s property for his own purposes or for those connected to him. The level of indemnity applied for and granted was £85,000. The value of the claim was circa £165,000.

This claim proved problematic not least because the respondent was resident both in and out of the jurisdiction. He did however have assets located in the UK. Permission was granted to serve proceedings on him by email.

 The respondent denied throughout the claims made against him, stating he ceased to have any management role or participation in the LLP during the relevant time.

Various witness statements were filed late by the respondent and evidence was disclosed by him very close to trial on which he sought to rely. Part 36 offers were made and received but came to nothing. The trial was listed for 18 and 19 March 2021.

Mediation was proposed by the respondent just before the trial was due to start. A one-day mediation took place and settlement was ultimately reached. The settlement sum was agreed to be paid in instalments.

Matthew Kelly of Freeths, the solicitors acting for the liquidator, said: “We and our clients have used Temple for ATE insurance on many occasions.  Most recently we acted for a liquidator pursuing claims to recover assets for the liquidation estate. After lengthy and heavily contested litigation, ultimately settlement was achieved at mediation. That settlement was only possible with the assistance of Temple’s direct, pragmatic and commercial approach. This was much appreciated by both us and the client.”


‘The Gosschalks Case’

Insolvency claim against bankrupt settles just before trial

This was an application by the trustee in bankruptcy for a declaration and order for possession and sale of the bankrupt’s property – of which he was the sole legal owner. The application was against the bankrupt and his wife, whom it was alleged had a fifty per cent share in the property.

The limit of indemnity applied for and granted was £40,000 and the value of the claim was put at circa £150,000. The policy was incepted in June 2020.

The bankrupt’s wife asserted she made significant financial contributions to the improvement of the property and household expenses and bills.

After various offers and counter-offers settlement was achieved in April 2021, just few days before the trial of the matter was listed to be heard. The settlement sum was payable in two instalments and the settlement terms were set out in a Tomlin Order.

Chris Adams of Gosschalks who had conduct of the matter on behalf of the trustee in bankruptcy said: “Temple were instrumental in us achieving an excellent settlement of our client’s claim, a trustee in bankruptcy who was seeking an order for possession and sale of the bankrupt’s property. Both we and the client highly valued Temple’s speed of response to requests made throughout the action and their support. This enabled us to extract a very good settlement at the door of the court.”

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