Enforcing Security – When Can A Secured Creditor Incur Liability?

In Davey v. Money & Anor [2018] EWHC 766 (Ch) the owner of a company in administration alleged that the company's main asset, a commercial property, had been sold at an undervalue by the administrators, and argued that the secured creditor (Dunbar) that had appointed the administrators was liable as well as the administrators themselves. The court held that neither the administrators nor Dunbar was liable. But it did not discount the possibility that a secured creditor could incur liability for the actions of an administrator it had appointed, if it had sought to influence the administrator's actions. In this article, we explain the court's findings on this point in Davey, and summarise the extent to which a secured creditor can potentially incur liability when enforcing its security by other methods.