Selling the 'Chose in action'—will it be a game
changer?
Recovering funds in an external administration, by allowing
administrators to assign to a third party the right to sue (chose
in action), was introduced under the Insolvency Law Reform Act
20161 (section 100-5 of Schedule 2 of the
Corporations Act 2001).
Although an assignment of a right to sue may seem a quick and
easy way to secure a recovery for an external administrator, while
upholding the intentions of the law where enforceable claims are
found, the practical issues must be considered before a Deed of
Assignment would be entered into by a registered liquidator. These
include:
- What rights to sue can be sold?
- How to determine the value of the claim/prospective claim and
how much to sell it for?
