Published on: 9th February 2021
This is the first in a series of articles concerning the case of PJSC Uralkali v Rowley & Baker as Former Administrators of Force India Formula One Team Limited (in Liquidation).
Administrators’ duty of care in company sales
The December 2020 case of PJSC Uralkali v Rowley & Baker as Former Administrators of Force India Formula One Team Limited (in Liquidation) is an interesting case concerning, primarily, the duty of care owed by administrators in company sales. It also deals with some interesting points concerning the duty of confidence, and the liability of jointly appointed administrators.
Firstly, it is useful to set out the background facts. The company, Force India, entered into administration, with a number of parties interested in purchasing the team and/or the business and assets of the company. The administrators decided, after some to-ing and fro-ing, to require interested parties to submit a both plan A (a rescue plan) and a plan B (an asset purchase).
One of the interested parties was PJSC Uralkali, who submitted a bid that was ultimately unsuccessful. They then brought this claim against the administrators alleging amongst other things:
In this series of articles, I look at each claim in turn, starting with the negligence claim. By way of reminder, the essential elements of a successful negligence claim are:
The most interesting part of the judgment concerns the first component of a negligence claim: does an administrator (Mr Rowley in this case) owe a prospective buyer (PJSC Uralkali in this case) a duty of care?
PJSC Uralkali argued that the answer was yes for the following reasons:
The court disagreed. Dealing with each point in the same order as above:
This part of the decision in particular will be welcomed by administrators as allowing them to get on with sales processes without fear of owing specific duties of care to potential buyers. Of course, this will not allow administrators to overcome fraud, and there may well be regulatory complaints. As ever, administrators should take advice from specialist insolvency solicitors throughout these processes.
For more information or to discuss such cases, please do not hesitate to get in touch.