Jurisdiction(s):
United Kingdom

Re Wealthtek LLP (special administration): High Court refuses client-asset litigation reserve; FSCS subrogation to govern recoveries; guidance on special administrators’ Objective 1 duties and recoverable costs (England and Wales)

Published on: 29 January 2025

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Re Wealthtek LLP (in special administration) [2024] EWHC 3050 (Ch) What are the practical implications of this case?

This ruling emphasises the need to:

distinguish an appointment as administrators of a trustee tasked with administering trust property
from being appointed as administrators of an insolvent company to deal with the company’s own assets, and
accurately identifying for the court the applicable regulatory regime

The first question had to be assessed against the objectives of special administration set out in the Investment Bank Special Administration (England and Wales) Rules 2011 (IBSA) SI 2011/1301, in particular Objective 1: the return of client assets as soon as reasonably practicable. That statutory aim framed how the court approached the Administrators’ mandate.

Because the Administrators’ function fell within category (i) above, and all clients were adults, the bank held the assets on bare trust; the right to pursue recovery was itself an asset to be restored to clients. Accordingly, control of claims rested with clients, not office-holders ultimately.

Accordingly, the Administrators erred in assuming they were obliged to run litigation for clients and in proposing to retain a litigation reserve on that footing.

As to the omission to draw to the court’s attention the role...

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