High Court Rules That Administrators Can Recover Funds In An Insolvent Company’s Bank Accounts Despite Potential Third-party Proprietary Claims

The High Court has allowed an application by the administrators of a company under section 234 Insolvency Act 1986 (IA 1986) requiring a bank to deliver up funds held in the company’s bank account: Laverty v Barclays Bank plc [2026] EWHC 1222 (Ch).

By way of refresher, section 234 IA 1986 allows a court to require any person in possession or control of “any property, books, papers or records to which the company appears to be entitled” to deliver them to an officeholder (which includes administrators).

The decision highlights that section 234 IA 1986 may extend to funds held in bank accounts where the administrators can establish that the funds are the company’s “property”, to which it appears to be entitled. It also emphasises that the existence of third-party proprietary claims would not prevent the court making an order pursuant to section 234 IA 1986, although the administrators would take the funds subject to any such claims.

The decision will be of interest to financial institutions as it illustrates that they may be at risk of being ordered to transfer funds held for insolvent corporate customers to their administrators, even where they raise concerns about possible third-party proprietary claims over the funds. Also, any underlying disputes over ownership may remain unresolved after the transfer, with the practical consequence that competing claimants may still pursue proprietary claims against the funds themselves. 

We consider the decision in more detail below. 

Background

Trident Funding Limited (Trident) entered administration, and joint administrators (the Administrators) were appointed. Trident held funds in various bank accounts with Barclays Bank plc (Barclays). It was common ground that the relationship between Trident and Barclays was that of customer and bank, such that Barclays owed a contractual debt to Trident equivalent to the sums standing to credit in those accounts.

The Administrators applied to the High Court under section 234 IA 1986 for an order requiring Barclays to pay over the funds held in Trident's accounts, as property “to which the company appears to be entitled.” Although Barclays did not actively oppose the application, it raised concerns that third parties might assert proprietary claims to the funds. The success of the application turned on whether: (i) the funds were property to which Trident was entitled under section 234 IA 1986; and (ii) the existence of any proprietary claims would prevent the court granting the order. 

Decision

The High Court granted the application.

The key aspects of the decision which may be of interest to financial institutions are set out below.

Company’s entitlement to sums in bank accounts

The High Court noted that in order to have jurisdiction to make an order under section 234 IA 1986, it had to be satisfied that the company appeared to be entitled to the relevant property (here, the sums held in the various Barclays’ accounts).

As to that, the High Court noted that in Smith (Administrator of Cosslett (Contractors) Ltd) v Bridgend CBC [2001] UKHL 58, the House of Lords considered the predecessor legislation, section 100 Companies Act 1862. This included express reference to applications as against bankers, which does not appear in the current wording of section 234 IA 1986. This gave rise to an argument that as a result, it had been intended that sums in bank accounts fell outside the scope of "property" under section 234 IA 1986. 

The House of Lords rejected that argument in Smith. It noted that the scope of the summary procedure had been enlarged by the IA provisions, meaning section 234 IA 1986 relief is now available against any person who has in their control "any property, books, papers or records to which the company appears to be entitled." The House of Lords also emphasised that it remained a discretionary remedy, obtainable by a liquidator or other office holder for the purpose of enabling them to carry out their functions.

The High Court adopted that reasoning and held that section 234 IA 1986 covered the payment out of a bank account in respect of a customer and bank relationship.

Third-party proprietary claims

The High Court was clear that, notwithstanding the order made pursuant to section 234 IA 1986, any third-party proprietary interests remained intact. 

The High Court noted that section 234 IA 1986 does not determine any proprietary claims which may or may not exist in respect of assets of the company. The company (acting through its administrators) obtained the sums subject to any proprietary claims. On the evidence before it, the High Court considered that there was no such evidence of these claims, but nevertheless stated that the section 234 IA 1986 order was not a determination of title. 

Accordingly, the High Court allowed the application.