CR-2024-MAN-000540 - [2025] EWHC 2159 (Ch)

Mr Faik disputes that he lacks objectivity, is partisan or has an axe to grind. Indeed, it was submitted on his behalf that it is quite improper for such allegations to be made as against him, and that there is not the evidential basis for them to be asserted.

So far as instructing RHF is concerned, it is submitted that there is nothing unusual or inherently wrong in an office holder instructing solicitors who had previously acted for the company prior to insolvency, and that there was often, as in the present case, good reason for doing so given the knowledge that those solicitors were likely to have regarding matters relevant to the conduct of the administration.

Mr Faik points to the fact that he is an Insolvency Practitioner and a Solicitor of many years standing with very considerable experience, including of managing conflicts of interest as an office holder.

As to the fact that Mr Faik’s Proposals and subsequent Progress Reports show the indebtedness of Milltom as being disputed, and as being valued at only £1, it is said that this is because, as office holder, Mr Faik was reliant upon information provided by the directors of the Company. However, that does not mean that he will not properly investigate relevant matters, and properly consider, when it is the appropriate time to do so, any proofs of debt that may be submitted by both secured and unsecured creditors. Mr Faik certainly disputes that he has, in any sense, predetermined the relevant issues as against Milltom. Rather, on the information available to him, he has simply raised issues and concerns, primarily on the basis of what he has been told.

Despite the way matters were expressed in correspondence, Mr Faik denies that it was ever his intention to simply unilaterally determine the priority and entitlement of Milltom as against the proceeds of sale of the Property. Rather, he envisaged, following any sale of the Property, seeking to reach agreement in relation thereto, and failing agreement, determining outstanding issues through the process of requiring proofs to be submitted, which would either be admitted (either in whole or in part) or rejected, in the latter case subject to appeal to the court.

On behalf of Mr Faik, it is submitted that there are real issues with regard to legal expenses deducted from the proceeds of sale of 5 and 6 Gezzerts Rise, the rate of interest charged by Milltom at 8% per annum and Mr Craig’s remuneration exceeding the 5% provided for by s.109(6) LPA 1925. It is Mr Faik’s case that these are issues best determined through the proof process, rather than by the court on the final hearing of the Order for Sale Proceedings, were Milltom to be given permission to continue the same.

So far as the sale of 6 Gezzerts Rise is concerned, it is Mr Faik’s case that there are very real issues and concerns raised thereby. The particular concern is that Mr Craig sold the same to Milltom without testing the market at all through a marketing process and simply based the price upon a valuation. Further, the point is made that an LPA receiver such as Mr Craig, given advice that the effect of the 10 year tenancy was to deflate the value of 6 Gezzerts Rise by some £100,000, ought at least to have investigated the possibility of the tenants surrendering their tenancy in return for a more limited payoff and, further, to have more fully investigated whether a new one-year lease had been entered into that might have effected a surrender of the 10 year term, thus improving the prospects of obtaining vacant possession. However, none of this appears to have been done. I was asked to draw adverse inferences against Milltom from the fact that there was no evidence from Mr Craig himself before the court, upon which Mr Craig could have been cross examined.

The sale of 6 Gezzerts Rise is relied upon by Mr Faik, essentially for two purposes:

The principal arguments advanced on behalf of Mr Faik as to why relief should be granted pursuant to paragraph 71 of Schedule B1 IA 1986, allowing for him to sell the Property, and have conduct of the sale thereof free of the security thereover, were the following:

In the circumstances, it is Mr Faik’s case that is appropriate to grant relief essentially along the lines sought by the Faik Application, rather than that sought by the Milltom Application.