No Bomb Shelter: Insolvency Practitioners Must Take Control
Two recent judgments of the English High Court in Re Dolfin Financial (UK) Limited (in special administration) [2026] EWHC 41 (Ch) and [2026] EWHC 957 (Ch) deliver a stark warning to insolvency practitioners tempted to seek the court’s blessing for decisions that fall squarely within their own commercial judgment.
The Joint Special Administrators (“JSAs”) applied for approval of a detailed Protocol governing the future conduct of the special administration and the distribution of client assets and client money. The court refused. The statutory scheme under the Investment Bank Special Administration Regulations already prescribes how a distribution plan is to be prepared, approved by the creditors’ committee and then submitted to the court. Approval of principles or draft terms at an earlier stage added nothing and undermined that scheme.
More fundamentally, the court reiterated the long-standing principle from Re T & D Industries plc [2000] 1 WLR 646: commercial and administrative decisions are for the office-holder, and the court “is not there to act as a sort of bomb shelter for him”. Experienced professionals are appointed precisely because they are capable of making difficult decisions. The application, involving some 5,000 pages of evidence, three files of authorities and three days of hearing time, was characterised as over-engineered and of no practical utility.
The consequences followed in the April 2026 costs judgment. The court found that the JSAs’ application had been ill-conceived and unnecessary. As a result, they were held liable for the respondent creditors’ costs on the indemnity basis. Further, the court declined to permit the JSAs to recoup either their own costs or the costs payable to the creditors from the estate. There is no automatic right of recoupment; costs must have been “properly incurred”, meaning reasonably as well as honestly incurred. These costs were not. The JSAs must therefore pay them from their own pockets.
The lesson is clear. Before issuing a directions application, office-holders should ask whether it is genuinely necessary or whether they are simply seeking shelter. The court’s role is supervisory, not protective, and the financial consequences of an unnecessary application are likely to fall on the office-holder personally.
