Rubin & Anor (Capitol Films Ltd) v Cobalt Pictures Ltd & 24 Ors [2010] EWHC 3223 (Ch) (09 December 2010)

Rubin & Anor (Capitol Films Ltd) v Cobalt Pictures Ltd & 24 Ors [2010] EWHC 3223 (Ch) (09 December 2010)

Administrators failed to investigate the validity of the Pangea Assignment and the true extent of company assets, despite having funds and creditor warnings. Their conduct fell below required standards, justifying personal and indemnity costs orders and precluding recovery of costs as administration expenses.

Citation
[2010] EWHC 3223 (Ch)
Parties
Applicants: David Rubin and Henry Lan; Company: Capitol Films Limited (in administration); Respondents: Cobalt Pictures Limited and 24 others; Secured Creditor: Allied Irish Banks plc; Secured Creditor: Aramid Entertainment Fund Limited; Secured Creditor: Aramid Entertainment BV; Secured Creditor: Directors' Guild of America; Secured Creditor: Screen Actors' Guild; Secured Creditor: Guild of America West; Secured Creditor: Fortress Value Recovery Fund LLC; Secured Creditor: Hemlock (Lux) SÀRL; Secured Creditor: Bernard National Loan Investors Limited; Purchaser/respondent: Exodus Film Company Limited
Jurisdiction
England and Wales
Judgment Date
09 December 2010
Procedural Posture
Insolvency Administration Application / Costs Determination Following Withdrawal of Application
Outcome
Costs awarded against administrators personally and on indemnity basis; administrators barred from recovering costs as administration expenses.
Legal Topics
Administration Order, Sale of Assets, Fixed Charges, Costs, Administrator Duties, Asset Transfer Investigation
Insolvency Company Law Administration Order Sale of Assets Fixed Charges Costs Administrator Duties Asset Transfer Investigation

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Parties

David Rubin and Henry Lan

Applicants

Capitol Films Limited (in administration)

Company

Cobalt Pictures Limited and 24 others

Respondents

Allied Irish Banks plc

Secured Creditor

Aramid Entertainment Fund Limited

Secured Creditor

Aramid Entertainment BV

Secured Creditor

Directors' Guild of America

Secured Creditor

Screen Actors' Guild

Secured Creditor

Guild of America West

Secured Creditor

Fortress Value Recovery Fund LLC

Secured Creditor

Hemlock (Lux) SÀRL

Secured Creditor

Bernard National Loan Investors Limited

Secured Creditor

Exodus Film Company Limited

Purchaser/respondent

Procedural Posture

Insolvency Administration Application / Costs Determination Following Withdrawal of Application

Legal Issues

  1. 1 Whether administrators should pay costs personally and on indemnity basis
  2. 2 Whether administrators can recover costs as expenses of administration
  3. 3 Adequacy of administrator investigation into pre-administration asset transfers

Ratio Decidendi

Administrators failed to investigate the validity of the Pangea Assignment and the true extent of company assets, despite having funds and creditor warnings. Their conduct fell below required standards, justifying personal and indemnity costs orders and precluding recovery of costs as administration expenses.

Court Disposition

Costs awarded against administrators personally and on indemnity basis; administrators barred from recovering costs as administration expenses.

Orders

  • Administrators to pay secured creditors' costs personally and on indemnity basis.
  • Administrators barred from recovering costs or their own costs as expenses of administration.