Creditors seldom get back all of the money owed to them when a company becomes insolvent, but you don’t have to take things lying down.

When a company fails consideration is often given to those that lose their jobs, but creditors often have to face up to losing a lot of money too.

This can be a double blow when the business and assets of the failed company are sold in a pre-pack deal to a connected party and it continues to trade as though nothing ever happened.

But what can you do if you are unhappy about the way in which the administration is being handled and think the best result possible for unsecured creditors is not being achieved?

One way forward is to vote out the insolvency practitioner (IP) and that is what happened at Grimsby-based Global Shipping Services Logistics.

Unhappy after administrators at Leonard Curtis announced that their dividend prospects were anticipated to be nil, around 100 of GSSL’s subcontractors and suppliers voted to appoint Charles Ranby-Gorwood as a liquidator instead.

Ranby-Gorwood proceeded to recover £411,590 in a VAT refund, enabling HMRC to be paid back in full and significantly swelling the eventual dividend to creditors.

In his progress report in September 2017, Ranby-Gorwood said: “It is not known why this VAT was not reported in any of the reports previously provided by the former administrators or indeed why a claim was not made for the funds.”

Ranby-Gorwood later agreed a settlement with GSSL’s owners, together with associated company Global Shipping Services Estates, of £1.35m. It means that the creditors will receive at least 60% of the amount they were owed, and possibly even more as the liquidator’s work is not yet complete.

Ranby-Gorwood said the liquidation would remain open for at least another year while he investigated various matters and also dealt with a claim relating to the high-profile truck cartel.

He added: “I just hope that creditors can see that sometimes a second opinion can help them get a better explanation of why things have gone wrong.

“In this case we were lucky because it also brought funds back with the consent of the owners of the company. I hope it shows the benefit of creditors getting together to support further investigation when they are not satisfied with the explanations they get.

“They might not get more money but they may get due respect.”

Leonard Curtis did not respond to questions put to it about the case, but creditor Paul Brewster said he had written to the Institute of Chartered Accountants of England and Wales (ICAEW) about the way in which the administration was handled.

Brewster, who was GSSL’s former operations manager, said: “I wrote to them six weeks ago asking them to look into the matter. Why was it that Leonard Curtis said there was no money for creditors and then Charles gets a £400,000 VAT rebate?

“I knew GSSL was a profitable company. It was listed as one of the top 50 fastest growing companies in Humberside.”

In response letters to Brewster, a case manager at the ICAEW said that the former administrator’s investigations were “ongoing” at the time that the liquidator had taken over the case.

It was also pointed out that a liquidator has “wider ranging investigative powers than an administrator” and that on the basis of the administrator’s reports and separate correspondence, there was nothing to suggest that the IP had failed in its obligations and that there was no evidence of misconduct.

How to complain

Getting together enough creditors to form a majority and vote in a new liquidator has been hailed as a victory for “creditor power”, but it is not the only solution.


The Insolvency Service (IS) has overall responsibility for monitoring the activities of the bodies that authorise insolvency practitioners, which includes the aforementioned ICAEW, as well as the Insolvency Practitioners Association and the Association of Chartered Certified Accountants. Complaints to the IS are administered by an insolvency enquiry line team and then these are submitted via a “Complaints Gateway” where they are assessed and then passed to the appropriate licensing body for further investigation.

In its latest annual review of insolvency practitioner regulation, the IS said that in 2016 the Gateway received 847 complaints. Of these, 456 were referred to the relevant professional body and 247 were rejected; 144 complaints remained on hold whilst the Gateway seeks further information from the complainant.

Sanctions against IPs include having their licences revoked, suspended or withdrawn, as well as reprimands and fines. An IS spokesman added: “No two complaints are the same and the time taken to investigate and report will depend on the depth of investigation needed.”

Pre-Packs Under Attack

Moves to make pre-pack administrations more open and transparent have largely been ignored by company directors, with few making use of a panel of experts who can scrutinise business sales, MT has learnt.

Pre-packs have attracted a bad press due a lack of clarity about the sale of a business and its assets, often to a director who has an existing relationship with the company in administration.


Following the Theresa Graham review of pre-pack administration procedures in 2014, one recommendation put forward was for a ‘pre-pack pool’ of experts to be established, who could provide their opinion on a proposed sale and purchase of a business by a connected party.

The idea was to provide reassurance to creditors that the sale had been reviewed by an independent person and could consider “the reasonableness of the proposed transaction."

The pool was created in 2015, but according to the Insolvency Service, out of 371 pre-pack administrations between 1 November 2015 and 31 December 2016, just 53 were referred to the pool: about 14%.

David Kerr, chief executive of the Insolvency Practitioners Association, said: “A key question might be to what extent creditors pay attention to the SIP 16 [insolvency practitioners’ compliance standards] statements and pool opinions where they are provided, and to what extent are creditors’ decisions on future trading with the new company influenced by a pool member’s report.

“If there is no discernible difference in creditors’ approach, then what will drive purchasers to pay for an opinion which is little read or considered?”