Insolvency Practitioners ' The Dos And Don'ts When Applying For A Freezing Order In An Insolvency Situation

• Published date: 21 August 2023
• Law Firm: Macfarlanes
• Author: Ms Lois Horne and Luke Chinniah

The Court of Appeal in Hunt v Ubhi has confirmed that insolvency practitioners seeking freezing orders are subject to the default requirement of providing an unlimited cross-undertaking in damages.

The Court of Appeal's judgment in Hunt v Ubhi[2023] EWCA Civ 417 provides useful guidance for insolvency practitioners seeking to obtain freezing orders. In particular, the decision highlights the importance of ensuring the adequacy of the cross-undertaking in damages provided in support of a freezing order application and the importance of making full and frank disclosure in the application.

Practical "dos and don'ts" for insolvency practitioners

1. Burden of proof - if seeking to offer less than an unlimited cross-undertaking in damages in support of a freezing order application, the burden of proof will be on the applicant insolvency practitioner to demonstrate why that is appropriate.
2. Sufficiency - if the amount of the cross-undertaking is going to be limited to certain assets (e.g. the estate of the entity in liquidation), insolvency practitioners should "stress test" the undertaking to ensure that, in actual fact, those assets are likely to be available and of sufficient worth.
3. Insurance - investigate...