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HMRC internal manual

Debt Management and Banking Manual

Ordinary cause: Claims for costs in insolvency cases

By virtue of Section 185 of the Insolvency Act 1986, apart from one or two exceptions, similar provisions apply to the winding up of a company to those applicable to claims for costs in sequestration cases (DMBM671820 onwards).

As soon as you become aware that a company has been wound up or liquidated, you should:

  • tell the sheriff officer to take no further action
  • withdraw the ordinary cause action.

Where appropriate you should include the ordinary cause costs in your claim in the liquidation and to this end, you should follow the instructions at DMBM671860. The exception to this being that where an arrestment has been laid outwith the “60 day period” before liquidation but no decree of furthcoming has been obtained, legal opinion differs as to whether or not the monies arrested must be handed over to the liquidator.

That being the case, where following arrestment the company is wound up or liquidated before either payment or decree of furthcoming has been obtained then you should refer the papers to the higher debt manager for instructions and at the same time advise the liquidator that a claim may be lodged in due course.