An insolvency office may be statutory, but the exposure that comes with it is personal and recent case law has provided three clear reminders of just how personal that exposure can be.
An officeholder’s exposure doesn’t end where the firm’s engagement letter says it does. Three English decisions confirm that insolvency practitioners can remain personally liable for duties arising from their statutory office, regardless of what their firm’s contract says, and regardless of whether they have since vacated that office.
Although these decisions arise from the English courts, their reasoning has wider relevance for practitioners working in common law jurisdictions where they may be relied upon as persuasive authorities.
The individual vs. the firm
An appointment is typically introduced through a firm’s engagement letter, administered by the firm’s staff and supported by its systems, reputation and professional resources. But the legal office itself is held by the named individual. That distinction can determine who is liable, whether a contractual limitation applies, and whether a claimant has even sued the right defendant.
In Pagden (as liquidator of Core VCT plc & others) v Fry and Mather [2025] EWHC 2316 (Ch), the Court held that while the firm could rely on the contractual limitation in its engagement letter for services within scope, the individual liquidators could not. The Court’s reasoning was rooted in the nature of the statutory office itself: liquidators are fiduciaries holding the company’s assets on statutory trust, and their duties arise from that statutory framework rather than from contract. Those duties cannot be modified or waived by the company, whether acting through its directors or shareholders, meaning an engagement letter can not shield the individual from liability tied to the exercise of the office.
Cedar Securities Ltd (in liquidation) v Phillips & Swan [2025] EWHC 2760 reached a consistent conclusion: where an engagement letter and general conditions were entered into in the firm’s name only, the individual liquidator was not a party to those terms and could not rely on them. The Court also considered the scope of statutory release available to a former liquidator and that the release could not be relied on in this case to absolve the liquidator of liability, a reminder that resignation or completion of the appointment doesn’t necessarily draw a line under every form of exposure.
The firm isn’t irrelevant but don’t assume it covers you
None of this makes the firm irrelevant. It may owe its own contractual or tortious duties, its own terms may govern claims relating to separately supplied services, and vicarious liability can arise where the necessary legal ingredients are established.
However, Yerbury v Azets Holdings Ltd [2025] EWHC 757 illustrates the limits of that protection. A lender appointed Law of Property Act receivers from CLB Coopers who sold a property for £720,000 less than the valuation. Mr Yerbury sued Azets, which bought the business of CLB Coopers including its future liabilities, and lost at first instance because he did not sue the receivers personally. He appealed and lost.
The Court held that the receivers’ employer was not vicariously liable for their acts simply because the receivers were its employees. Their authority to act and the duties they owed, flowed from the appointment itself, exercised independently, not from the employment relationship.
Read together, the cases show that the individual officeholder and their firm cannot be assumed to carry the same liability, and that assumption can cut against both practitioners and claimants who direct proceedings at the wrong party.
Why this is important in Cyprus, ADGM and DIFC?
In ADGM, English common law precedents apply directly pursuant to the Application of English Law Regulations 2015.
DIFC’s own Application of Civil and Commercial Laws (DIFC Law No. 3 of 2004, as amended in 2024) allows DIFC Courts to draw on English common law, and other common law jurisdictions, where DIFC statute does not otherwise provide.
Cyprus, like DIFC and ADGM, also has its own statutory insolvency framework, but English case law provides persuasive authority especially where relevant principles have not been specifically addressed by the Cyprus courts.
These decisions therefore offer a useful indication of how common law jurisdictions may approach the allocation of liability between an officeholder and the firm through which that officeholder operates.
The practical takeaway
Taken together, these decisions are consistent in the message they send: officeholders act in a personal capacity when exercising their statutory functions.
Office holders cannot assume an engagement letter cap protects their statutory office or that their firm will automatically carry vicarious liability for their acts. Neither can they assume that leaving office closes off every avenue of exposure. Office holders must maintain the standard of conduct the office demands and can mitigate their risk by seeking directions from the court when genuine uncertainty arises.
Ultimately, practitioners should seek to ensure their professional indemnity cover is sufficient to meet claims arising from that personal capacity, rather than assuming the firm’s arrangements will absorb the risk.
Andri is on the list of approved Insolvency Practitioners of the DIFC and ADGM. She is a solicitor, Member of the Law Society of England and Wales and a Licensed Insolvency Practitioner in Cyprus.
Chris is a Chartered Accountant, member of the Institute of Chartered Accountants in England and Wales (ICAEW) and the Emirates Association for Accountants and Auditors (EAAA), his details are on the list of approved Insolvency Practitioners in DIFC and ADGM. He is also a UK, Cyprus and Romania licensed Insolvency Practitioner.
