Frances Coulson
- Partner
- Insolvency & Restructuring
Rawbank SA v Banfield & Ors
ICC Judge Barber’s judgment in Rawbank SA v Banfield & Ors (Re Travelex Bank Notes Ltd) [2025] EWHC 3054 (Ch) follows the trial of an application by Rawbank SA, an unsecured creditor of Travelex Bank Notes Limited (now TB Realisations Limited) for over £48 million seeking an order appointing two further insolvency practitioners, Nicholas Nicholson and Robert Starkins of Grant Thornton, as additional (rather than replacement) liquidators of the company pursuant to s 108 Insolvency Act 1986.
The first respondents were the existing joint liquidators of the company, all from PricewaterhouseCoopers LLP. The basis of the proposed additional appointments (which were opposed) was the investigation of potential claims. Parts of the hearing were held in private because of the need to refer to advice on the potential claims to be investigated. The publicly available judgment was also anonymised in part.
The applicant, Rawbank, is the largest bank in the Democratic Republic of Congo. The company was part of the Travelex Group which operated as a wholesale supplier of bank notes to financial institutions, including Rawbank with which it had done business since 2004. The company’s immediate parent was a company known as Travelex Limited. The head of the Travelex Group was Travelex Holdings Ltd. Travelex Holdings Limited was itself a subsidiary of Finablr plc.
By late 2019 Finablr and the Group were in financial trouble. Finablr engaged a team from PwC to act as its financial advisers. Unaware of the extent of the Group’s difficulties, on 16 March 2020 Rawbank placed an order with the company for US $40 million worth of bank notes. There was a further order thereafter. The company failed to deliver the bank notes and refused a refund of money already paid. Rawbank applied (largely unsuccessfully) for a freezing order and issued proceedings for breach of contract and/or misrepresentation, subsequently, with the consent of the company, obtaining summary judgment against it for US$60,072,000.
The company failed to satisfy the judgment debt and on 21 July 2020 went into administration on an out of court appointment by the directors. Toby Banfield, David Kelly and John Macnamara of PwC were appointed as joint administrators. (In 2023 the company moved from administration to creditors voluntary liquidation, and the administrators were appointed as liquidators.)
Meanwhile, in or after March 2020 significant “sweeps” of money by way of inter-company transfers took place, to the apparent disadvantage of the company and its creditors. The respondent administrators had, it seems, taken the view that the relevant transactions had taken place as part of the Group’s routine conduct of its business as between the parties concerned. Unsurprisingly, Rawbank took a different view, contending that there was a prima facie case of the transactions being preferences which, if pursued, would be likely to result in a return to creditors. That being the case, Rawbank submitted, the respondents were faced with an actual or potential conflict of interest: investigating the issue would involve looking into events during the period from the date of their engagement in March 2020 to their appointment as administrators (the PwC team engaged by the company to advise during the pre-administration period included two of the three office-holders subsequently appointed as administrators and thereafter as liquidators). Leading counsel for Rawbank submitted that, according to the terms of PwC’s engagement letter, the work undertaken involved giving the green light or red light to financial and cashflow decisions at a time when Rawbank was making payments for its orders of bank notes while at the same time the cash “sweeps” were being carried out. The same PwC team, he argued, was also in place and approving (or not) other financial and cashflow decisions at a time when the company was refusing to refund US $60 million to Rawbank on the basis that it was undergoing restructuring, yet at the same time the company was paying significant sums to another creditor.
Leading counsel for Rawbank made clear that he was not suggesting any impropriety on the part of the respondents. Rather he was saying that it was apparent that, when considering what investigations to make and what claims may or may not be sustainable, the respondents would have had an actual or potential conflict which, even subconsciously, could have affected their approach to any investigation. A fair-minded and informed observer would conclude that there was a possibility of bias.
In those circumstances, Rawbank submitted, the court should give relief under s108(1) Insolvency Act 1986.
The respondents rejected the contention that there was any conflict. Among other matters, they relied on the fact that they had instructed solicitors, Brown Rudnick LLP, to provide independent legal advice with a view to assessing what, if any, potential claims or actions might have been available to them or the company that might result in recoveries for the benefit of creditors. The judge was not impressed, finding this to be an inadequate response to managing any possible conflict.
Notwithstanding the opposition from the respondents, ICC Judge Barber ultimately accepted Rawbank’s submissions, holding that a prima facie case had been made out for preference and echoing other submissions made on behalf of Rawbank in concluding that “the Respondents were in a position of actual or at the very least potential conflict when considering what investigations to carry out in respect of the Company in relation to the Pre-Administration Period and in determining which claims may or may not be viable. A fair-minded and informed observer would conclude that the Respondents, as the decision-makers, were, or at the very least had the potential to be, biased.” She disregarded the views of creditors opposing the appointment of additional liquidators: although they were not connected with the insolvent company (see ss 249 and 435 Insolvency Act) they were, in the judge’s view, “associated” with the company.
The judge went on, subject to suitable undertakings being given, to appoint the two proposed conflict liquidators in addition to the existing office-holders, but for a limited period of 18 months, after which they were to report to the court.
This is not the only case in which the court has seen fit to appoint “conflict office-holders.” Other examples include Clements v Udal [2002] 2 BCLC 606, Re Comet Group Ltd [2018] EWHC 1378 (Ch) and Re Microcredit Ltd [2021] EWHC 1627 (Ch).
This article is for general information purposes only and does not constitute legal advice or a comprehensive statement of the law. Specific legal advice should always be sought in relation to individual circumstances.
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