In a powerful example of the type of bitter controversy in which administrators and liquidators can find themselves reluctantly entangled, two accountants engaged in winding up the affairs of an insolvent television studio have fought off claims that they unlawfully converted chattels worth £14 million.
The accountants had been appointed first as administrators, then as liquidators, of the family-owned company that ran the studio. They had sold valuable equipment and other items found on the premises with the intention of distributing the proceeds to creditors. However, they faced claims by a number of third parties that the items realised had belonged to them rather than to the company.
In exonerating the liquidators, the Court found that an invoice and assignments relied upon by the claimants were ‘not genuine’, having probably been created subsequent to the company’s liquidation although they bore earlier dates. The liquidators were also protected by Section 234 of the Insolvency Act 1986 in that they had reasonably believed that they were entitled to seize and dispose of the disputed assets.
The Court accepted that certain items of relatively low value had not belonged to the company but ruled that the liquidators had in any event dealt with them lawfully and reasonably. Two of the claimants were ruled liable to pay the substantial costs of the company’s administration and another family-controlled company was directed to account for £130,000 it had received under a contract with the BBC.