The High Court’s decision in Rawbank S.A. v Banfield & Ors [2025] EWHC 3054 (Ch) provides important guidance on the court’s approach to perceived conflicts, creditor opposition and the appointment of additional liquidators under section 108 of the Insolvency Act 1986.
Focusing on the court’s discussion and conclusions, the case reinforces that insolvency proceedings are not solely creditor-driven and that the court will intervene where confidence in the integrity of the process is at risk.
Key principles from Rawbank v Banfield: Perception, advice and creditor influence
Three themes emerge as central to the court’s reasoning:
• the importance of perceived independence, not merely actual impropriety;
• the limits of reliance on external legal advice as a solution to conflict concerns; and
• the court’s continued willingness to exercise its supervisory jurisdiction notwithstanding creditor opposition.
Taken together, the decision is a reminder that insolvency proceedings are not governed solely by creditor consensus or professional assurances, but by the court’s assessment of whether the process meets objective confidence.
Why perceived independence matters in insolvency proceedings
The judgment emphasises that confidence in the insolvency process depends not only on actual independence, but on how independence is perceived by an objective observer. Even in the absence of misconduct, structural or historical connections can undermine confidence.
Can external legal advice cure a conflict of interest?
The court made clear that while external advice may assist decision-making, it does not remove the liquidator’s responsibility or eliminate concerns about perceived conflicts.
The limits of creditor opposition in court-supervised liquidations
Creditor views remain relevant, but they do not override the court’s supervisory duty where confidence in the process is at risk.
Background to the dispute: Rawbank’s application for additional liquidators
Rawbank S.A. was a substantial unsecured creditor of Travelex Bank Notes Limited (now TB Realisations Limited). Following administration, the company entered creditors’ voluntary liquidation, with the same individuals acting as administrators and subsequently as liquidators.
Rawbank applied to the High Court under section 108 of the Insolvency Act 1986 for the appointment of two additional liquidators for a limited and defined purpose: to investigate potential claims arising from transactions entered into during the period immediately preceding insolvency.
The creditor’s concerns over prior advisory involvement
The application was not based on allegations of dishonesty or misconduct. Instead, Rawbank argued that the liquidators’ prior advisory involvement gave rise to a perceived conflict which undermined confidence in their ability to investigate certain matters objectively.
Why the appointment was resisted by liquidators and creditors
The application was resisted by the existing liquidators and by a majority of unsecured creditors, who argued that additional appointments were unnecessary and potentially disruptive.
Section 108 Insolvency Act 1986: The court’s supervisory powers explained
Section 108(1) of the Insolvency Act 1986 confers a broad power on the court to appoint, remove or replace a liquidator. As the court reaffirmed, this power is not confined to situations where no liquidator is acting, nor is it dependent on proof of misconduct.
The jurisdiction is supervisory in nature. The central question is whether, viewed objectively, the continued conduct of the liquidation gives rise to a lack of confidence such that court intervention is justified. The court may appoint additional liquidators where this would improve the integrity and perceived fairness of the process.
When can the court appoint or replace a liquidator?
The court can intervene whenever confidence in the integrity of the liquidation process is at risk, even where no wrongdoing is alleged.
How much weight should be given to creditor views?
Creditor views are relevant to the exercise of discretion, but they are not determinative. The court must assess the weight to be given to those views in light of all the circumstances.
How the court assessed independence, perception and decision-making
The court approached the application by focusing on perception rather than fault. The relevant test was whether a fair-minded and informed observer would consider that the liquidators could be seen to act independently when investigating transactions occurring during a period in which they had previously advised the company.
The fair-minded observer test and perceived conflicts
The court accepted that the appearance of independence was central to maintaining confidence in the insolvency process.
Why independence of advice is not the same as independence of judgment
The court acknowledged that external legal advice had been obtained to address any potential conflict. However, this was not decisive. The liquidators remained responsible for defining the scope of any investigation and for deciding whether claims should be pursued. Obtaining advice did not remove that responsibility or the perception problem that arose from it.
Significant weight was placed on the fact that the concerns related to the structure of the decision-making process rather than to any specific act or omission.
Balancing creditor opposition against confidence in the process
Although the majority of creditors opposed the application, the court held that this did not prevent intervention. Creditor opposition had to be assessed critically, particularly where those creditors were connected to the restructuring or where opposition did not necessarily reflect the interests of unsecured creditors as a class. The court was entitled to conclude that the appointment of additional liquidators would enhance confidence in the liquidation without causing undue disruption.
What Rawbank v Banfield means for insolvency practitioners and creditors
The decision in Rawbank v Banfield underscores the court’s active supervisory role in insolvency proceedings and its readiness to intervene where confidence in the process is at risk. The judgment makes clear that perceived conflicts, even absent any allegation of wrongdoing, can justify the appointment of additional liquidators.
Practical lessons for liquidators and advisers
For insolvency practitioners, the case serves as a reminder that early advisory involvement may have lasting implications and that reliance on external legal advice will not always resolve concerns about independence.
Strategic implications for unsecured creditors
For creditors, the decision confirms that the court remains willing to act where legitimate doubts persist, even where a liquidation is well advanced and despite opposition from the majority.
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