The recent decision of Munin Navigation Company Limited (“Munin”) v Petrodel Resources Limited (“PRL”) put before the Isle of Man courts the question of whether sanction should be given to a liquidator to appoint lawyers in the Isle of Man and various jurisdictions worldwide, and whether retrospective sanction where lawyers had already been appointed by the liquidator, without the Court’s consent, could be given. Due to an oversight by the liquidators chosen Advocates, this sanction had not been previously sought.
Under section 184 of the Companies Act 1931 a liquidator is able to exercise a raft of powers, but requires either the sanction of the Court or of any Committee of Inspection (if one has been appointed). In this case, as no Committee of Inspection existed, the sanction required, being permission to employ lawyers, had to be obtained from the Court.
The Court recognised that it was common ground that the failure to obtain such sanction did not invalidate the original appointment of the Advocates, nor did it render invalid any work done by them. It would mean, however, that the Advocates could not be paid out of the estate by the liquidator, as it was a failure by the appointed Advocates that such sanction was not obtained.
Read the full article here: Permission for a liquidator to appoint a lawyer