Misconceived and Misguided: Kroll Advisory’s Block On Creditor Justice

Why Assignments Matter

When a company fails, individual creditors often lack the leverage to influence what happens next. By assigning their rights to a specialist like Insolvency & Law, creditors can combine their claims, speak with one voice, and ensure their interests are not side-lined.

For loan note holders, this collective mechanism is often the only realistic way to gain influence in a complex insolvency. It unlocks representation on committees, the ability to propose amendments to proposals, and the power to hold administrators to account on critical issues such as fees, conduct, and transparency.

The Pushback from Kroll Advisory

In the 79th Group insolvency, Kroll Advisory have flatly refused to recognise creditor assignments made to Insolvency & Law. They argue that the loan notes’ “no transfer” clauses block any form of assignment, legal or equitable.

What does this mean in practice? Loan note holders are deliberately kept apart. Instead of joining forces under one representative, their claims remain scattered and weakened. The result: a fragmented creditor base and far less scrutiny of administrator decisions.

For administrators, that outcome is convenient. For creditors, it is devastating.

Why Would Administrators Resist?

The question is not simply legal. Administrators know that when Insolvency & Law is admitted as a creditor, scrutiny follows. We are known for:

• Questioning administrator reports line by line
• Challenging proposals that do not align with creditor interests
• Pushing back on excessive remuneration
• Mobilising creditors to call decision procedures, form committees, and demand accountability

For administrators, that level of oversight can be uncomfortable. For creditors, it is essential.

In High Street GRP, for example, Insolvency & Law clashed with administrators Carrie James and Tony Hyams over their defensive handling of creditor concerns. Our involvement led to greater transparency and pressure for accountability. The same dynamic now appears to be unfolding with Robert Goodhew and Andrew Stoneman, the appointed Joint Administrators from Kroll Advisory.

The Legal Argument

We believe Kroll’s position does not stand up under English law:

1. Transfer vs Assignment
   The wording “no transfer” is broad, but assignment is a specific legal concept. Unless a contract expressly prohibits assignment of accrued debts, courts often interpret the clause in favour of creditors.
2. Accrued Debts Can Be Assigned
   If an investment matured before insolvency, that right to payment is usually treated as an accrued debt. In cases like Linden Gardens and Don King, courts confirmed that accrued debts can often be assigned even where contracts include restrictions.
3. Equitable Assignments Still Stand
   Even if strict legal assignment is blocked, creditors may still assign the beneficial interest in their claims through an equitable assignment. These are difficult to invalidate unless specifically prohibited.

Recent case law such as First Abu Dhabi Bank v BP Oil reinforces these principles. In our view, Kroll’s blanket rejection of assignments is legally flawed.

What’s at Stake for Loan Note Holders

If Kroll Advisory persists, loan note holders lose more than just a technical point:

• Loss of collective power: Creditors cannot consolidate and act as one.
• Reduced influence: Without recognised assignments, Insolvency & Law cannot amend proposals and sit on committees.
• Lower transparency: Administrators face fewer challenges over fees, reports, and conduct.

A Wider Transparency Gap

The contrast between administrators is striking. Grant Thornton’s disclosures in The 79^th Group company: 79th Luxury Living Six Ltd. have been seen as relatively open. Kroll, by comparison, appear to take a stricter, closed approach. Loan note holders should ask themselves:

• Why should legitimate creditors be excluded?
• Who benefits when creditors cannot act collectively?
• What precedent does this set for other schemes?

The insolvency process exists to protect creditors, not to shield Administrators from challenge. By blocking valid assignments, Kroll Advisory risks dismantling collective action and leaving loan note holders isolated at the very moment unity is most needed.

If Kroll persists in rejecting lawful assignments, Insolvency & Law is prepared to seek court directions. Creditors deserve more than silence, they deserve transparency, fair treatment, and a genuine voice in how this process unfolds.

Disclaimer:

Logos used in this post are for identification and commentary purposes only. Insolvency & Law Ltd is not affiliated with, endorsed by, or acting on behalf of any company named. Use is permitted under fair dealing provisions for reporting, criticism, and matters of public interest.

Disclaimer: Insolvency & Law Ltd is not a firm of solicitors or licensed insolvency practitioners and does not provide legal advice, investment advice, or any regulated services under the Legal Services Act 2007 or the Financial Services and Markets Act 2000. All content published by I&L relating to The 79^th Group, including blogs and podcasts, is provided free of charge for general information and educational purposes only. Therefore, it must not be relied upon as professional advice.

Where appropriate, I&L may take legal assignment of loan notes issued by The 79^th Group companies in its own name, for the purpose of enforcement and recovery. In such cases, I&L bears all associated costs and risks, and the original loan note holder is fully insulated from legal expense and liability.