Administrator’s expenses

Freakley v Centre Reinsurance International Co [2006] All ER (D) 121 (Oct); HL NLJ 20 October

The expenses of claims handlers incurred on the instructions of insurers acting under a policy entered into by a company before the appointment of an administrator, which neither the administrator nor the court had approved, cannot be treated as liabilities incurred by the administrators in carrying out their functions within s19(5) of the Insolvency Act 1986. Accordingly, the right to reimbursement of such expenses does not have statutory priority over the company’s other debts.