This article considers the legal efficacy of “no expense claim” clauses limiting liability in insolvency office-holders’ contracts and the associated risks for the counterparty.
Office-holders in all forms of corporate insolvency proceedings are naturally keen to limit their potential exposure to liability on their contracts. In the case of administrative receivership, there is a long-standing practice of including a term excluding personal liability on the part of the receiver. This was, and is, necessary because s 44(1) of the Insolvency Act 1986 (IA 1986) provides that, although an administrative receiver is deemed to be the company’s agent unless and until the company goes into liquidation, he is personally liable on any contract which he enters into in the course of carrying out his functions, unless the contract otherwise provides.