How Does A Liquidator Decide On A Creditor Claim?

Question

How does a liquidator decide on a creditor claim?

Answer

A liquidator decides on a creditor claim by considering it alongside the evidence and supporting documents and circumstances. However, whilst a liquidator has to act like a judge in good faith and be fair, he or she is not acting as a judge and determine the creditors proof of debt as if it was formal court proceedings.

In the case of Sanrose Investment Ltd v Foley & Ors [2025] EWHC 1071 (Ch) the matter was considered when the Court reversed a liquidator’s decision on a creditor claim:

an office-holder must consider a creditor’s claim and the supporting materials, and no doubt he must act fairly and in good faith – as did the Liquidators in this case – but he is not under an obligation to replicate the processes of formal court proceedings; he is entitled to act proportionately, matching the process to the issue. In this case, it was not necessary, to avoid a costs order, to involve Sanrose, or FIL (or indeed FWJ) in the decision making process, or to seek their evidence or comment. The Liquidators reasonably considered that they had all relevant materials (indeed, that was part of the case against them, that there was nothing new, and yet they reached a different conclusion from that previously stated)