Judges dealing with insolvency cases have an array of tools available to them that can be used to ensure the best possible outcome for creditors. In one case, the High Court engaged its rarely used power to appoint a receiver by way of equitable execution in order to promote a football club’s survival as a going concern.
The company that owned the club’s property assets and its principal shareholder were subject to a judgment debt in a sum exceeding £25 million. The creditor who had obtained that judgment had been active in its enforcement efforts, obtaining freezing orders, charging orders and orders for sale in respect of real property and shares owned by the debtors. Those orders had, however, achieved very little in terms of satisfaction of the judgment debt. In those circumstances, the creditor sought appointment of a receiver by way of equitable execution.
In ruling on the matter, the Court noted that the appointment of such a receiver was not a usual form of order, enabling as it would the getting in of assets that would not otherwise be susceptible to ordinary processes of enforcement. Such an order would only be justified if there was some hindrance or difficulty in using more conventional enforcement methods, and the overriding consideration was whether appointing a receiver by way of equitable execution would serve the demands of justice.
In granting the order sought by the creditor, the Court accepted that it offered the best hope of saving the club as a going concern. Its sale as a whole, rather than piecemeal, promised the most favourable outcome for the creditor, which planned to replace the club’s management and put in experts to run it pending its disposal. In those circumstances, the Court was satisfied that the appointment of a receiver by way of equitable execution in respect of the debtors’ footballing assets would achieve a real benefit and was plainly in the interests of justice.
