Challenges to an insolvency office-holder

In exercising their role, duties, functions and powers, insolvency office-holders are under a duty to take reasonable care in their management of the estate's affairs, not to make a secret profit and not to act when they have a conflict of interest.

An office-holder must act in the best interests of creditors as a whole, subject to some limited exceptions, and as such must exercise a high standard of care and skill. They must always act impartially and independently.

With the exception of voluntary liquidators, office-holders will be acting as officers of the court, whether appointed in or out of court, and therefore must comply with the duty applicable to officers of the court set out in Ex Parte James (1874) 9 Ch Apt 609 (not reported by LexisNexis®) to act honourably and fairly. This will mean that a court may act accordingly if an officer of the court has taken unfair advantage and obtained unjust enrichment for the estate (or themselves) as a result of their position. The court, using its discretion, may order compensation in these circumstances.

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