[2025] EWHC 2674 (Ch)

In a liquidation or administration, property held legally by the company can involve separate funds from which expenses and debts can be paid. The pot of assets held on behalf of the general creditors does not extend to assets held under any fixed charge (save for the asset of the equity in redemption). The pot available to meet general creditor claims and expenses, as a result of various statutory reforms which have weakened the strength of the security interest provided by a floating charge, will include assets subject to such a charge, for the purpose of meeting expenses of the administration, preferred creditors and, as to a “prescribed part”, the claims of general creditors. However, assets subject to a fixed charge remain inviolate.

Expenses of the administration, including office-holder remuneration and costs, are paid from the company’s fund and assets subject to floating charges, but not from assets subject to fixed charges which, save when the court orders otherwise in certain circumstances, are left substantially untouched by the insolvency process.

The Judge considered the overall structure of the administration of an insolvent company so far as “free assets”, and those subject to floating and fixed charges, and the clear distinction which he held that English insolvency law draws between the “company’s pot” and “the chargee’s pots” (subject to certain statutory reforms concerning assets which were subject to a floating charge”). The Judge held that Part 18 of the 2016 Rules is concerned only with remuneration and costs which amount to expenses of the administration, which will be met from “free” assets as statutorily enlarged in relation to assets subject to floating charges, a conclusion which he found to be consistent both with the terms of Part 18, and the structure he had summarised.

The Judge also referred to other circumstances and jurisdictions under which an office-holder might claim remuneration and expenses for work done in that capacity otherwise than from the company’s fund as statutorily enlarged, referring to the jurisdiction recognised in Re Berkeley Applegate [1989] Ch 32 and when the court authorises an administrator to sell an asset subject to a fixed charge as though it was not subject to any security under paragraph 71 of Schedule B1 of the Insolvency Ac 1986 (the court having power in each case to order remuneration to be paid from the proceeds of realising assets which fall outside the company’s fund). The Judge pointed to these as occasions when remuneration is paid to an office-holder out of the proceeds of sale of fixed assets which the Judge held did not fall within the procedure in Part 18 of the 2016 Rules, and which were inconsistent with the Appellants’ argument that all remuneration received by the administrator in the course of the administration were subject to Part 18, whether paid from the “company pot” as statutorily enlarged, or from fixed charge assets.