In the matter of Capitol Films Limits (in administration), David Rubin and Henry Lan (Joint Administrators of Capitol Films Ltd v. Cobalt Pictures Limited and 24 others  EWHC 3223 (Ch) - IPs tested
Mr Richard Snowden QC (sitting as a deputy High Court Judge) has handed down his judgment in In the matter of Capitol Films Limits (in administration), David Rubin and Henry Lan (Joint Administrators of Capitol Films Ltd v. Cobalt Pictures Limited and 24 others  EWHC 3223 (Ch). I have managed to speak to one of the solicitors who was involved in the case, Mr Michael Mulligan of Field Fisher Waterhouse. He has summarised the case in the following manner:
"This judgment serves as a warning to insolvency practitioners that they could incur significant financial penalties if they bring misconceived applications to court which affect the security of creditors and if they fail to investigate the conduct of directors and antecedent transactions in an insolvency. In normal circumstances the administrators would expect to recover their own legal costs from the assets of the insolvent company in priority to floating charge holders and unsecured creditors.
In this case, however, the judge considered that the conduct of the administrators was unreasonable to the extent that they should only recover their costs and expenses after both fixed and floating chargeholders and unsecured creditors are paid from any realisations in the estate. In effect, the administrators will have to pay significant sums of money to creditors personally.”
"This is the ultimate statement of where the law on IVAs is to be found in our great common law...