Introduction

The case of Curistan v. Keenan ([2013] NICh 13) adjudicated by McCloskey J in the High Court of Justice, Chancery Division, Northern Ireland, delves into the intricacies of insolvency administration and the interpretation of "unfair harm" under the Insolvency (NI) Order 1989. Marian Anne Curistan, acting as a plaintiff, challenged the actions of Thomas Martin Keenan, the statutory administrator of Sheridan Millennium Limited ("the company"), alleging that Keenan acted unfairly to harm her interests. This commentary provides a comprehensive analysis of the judgment, exploring its background, legal reasoning, and its implications on future insolvency cases.

Summary of the Judgment

In a dispute arising from the administration of Sheridan Millennium Limited, Marian Curistan sought to have the ongoing 2010 legal action against Anglo Irish Bank Resolution Company Limited (IBRC) assigned to her. Keenan, the appointed administrator, proposed that Curistan provide a contingent costs indemnity of £250,000 for the assignment, which she refused. Consequently, Curistan filed an application alleging that Keenan's decision was unfairly harmful to her interests under paragraph 75 of Schedule B1 of the Insolvency (NI) Order 1989.

McCloskey J meticulously examined the circumstances surrounding the administration, the potential impact of assigning the 2010 action to Curistan, and the definitions under Schedule B1. After thorough analysis, the court dismissed Curistan's application, concluding that Keenan's decision did not constitute "unfair harm" as stipulated by the statute. The judgment emphasized the necessity for unequal or differential treatment to justify a claim of unfair harm, which was absent in this case.

Analysis

Precedents Cited

The judgment referenced several key cases and legal texts to underpin its reasoning:

• Curistan v Keenan and Anglo Irish Bank Corporation Limited [2011] NICH 23: Provided a foundational overview of the company's history and the financial disputes with IBRC.
• Marcus Ward Limited v Anglo Irish Bank Corporation Limited [2011] NICH 7: Highlighted the court's stance on injunctions related to winding-up petitions.
• Bailey and Groves, Corporate Insolvency Law and Practice: Offered insights into the interpretation of "unfair harm" within insolvency contexts.
• Re Lehman Brothers International Europe [2008] EWHC 2869: Emphasized the administrator's duty to act in the creditors' collective interest.
• Re Coniston Hotel LLP [2013] EWHC 93 (Ch): Clarified that "unfair harm" requires differential treatment disadvantaging the applicant specifically.

These precedents collectively reinforced the court's interpretation that "unfair harm" necessitates more than mere detriment—it requires unjustifiable differential treatment among creditors.

Legal Reasoning

The crux of the court's decision hinged on interpreting "unfair harm" under paragraph 75 of Schedule B1. The court adopted the approach from Re Coniston Hotel LLP, determining that harm must involve unequal treatment that cannot be justified by the administration's objectives. In this case, the administrator's decision not to assign the 2010 action solely to Curistan did not disproportionately disadvantage her compared to other creditors. The assessment considered:

• The absence of discriminatory treatment towards Curistan.
• The implications of assigning the action, including potential financial risks to the administration.
• The equitable treatment of all creditors in line with the administrator's duties.

Furthermore, the court recognized that Curistan retained the right to pursue her claims independently, ensuring her interests were not sidelined.

Impact

This judgment sets a significant precedent in Northern Ireland insolvency law by clarifying the boundaries of what constitutes "unfair harm" to a creditor under administrative proceedings. Future cases will reference this decision to determine whether administrators' actions unjustly disadvantage specific creditors. The emphasis on equal treatment ensures that administrators exercise their powers without bias, maintaining fairness across the creditor class. Additionally, it underscores the importance of administrators safeguarding the collective interests of all creditors, preventing preferential treatment unless clearly justified.

Complex Concepts Simplified

Schedule B1 of the Insolvency (NI) Order 1989

Schedule B1 outlines the framework for challenging an administrator's conduct in insolvency cases. Paragraph 75 specifically allows creditors or company members to apply to the High Court if they believe the administrator is acting unfairly to harm their interests. "Unfair harm" requires demonstrating that the administrator's actions disproportionately disadvantage the applicant compared to other creditors.

Administrator's Duties

An administrator is mandated to manage the company's affairs with the goal of rescuing the business or achieving a better outcome for creditors than liquidation would provide. This duty includes acting impartially and in the collective interest of all creditors, ensuring no individual creditor is unfairly favored or disadvantaged.

Assignment of a Legal Action

Assignment refers to transferring the legal rights of a plaintiff in a lawsuit to another party. In this case, Mrs. Curistan sought to have the ongoing 2010 action against IBRC assigned to her, potentially allowing her to directly benefit from any damages awarded.

Conclusion

The judgment in Curistan v. Keenan reinforces the principle that insolvency administrators must act equitably towards all creditors, ensuring no individual is singled out for preferential treatment without just cause. By dismissing Curistan's application, the court affirmed that potential detriment alone does not equate to "unfair harm." This decision underscores the necessity for administrators to maintain a balanced approach, focusing on the collective interests of creditors while navigating complex financial disputes. As a precedent, it offers clear guidance for future insolvency proceedings, promoting fairness and consistency within the legal framework governing company administrations.