Product liability claims can arise many years after the event and that can give rise to problems, particularly where the manufacturer has gone out of business in the interim. In one such case, however, the High Court found that creditors had waited long enough for any such claims to emerge and granted liquidators permission to distribute the remaining assets of a defunct maker of motor engines.
The manufacturer was a subsidiary of the MG Rover Group and went into administration in 2005 and into liquidation the following year. The liquidators held a balance of £10.5 million and sought permission to distribute that sum to those creditors who had already made themselves known.
There was concern that long-tail product liability claims against the manufacturer might yet emerge. If such claims related to the period after the manufacturer entered administration, but before it ceased trading, they would represent expenses of the administration and would take priority over claims in the liquidation.
In granting the liquidators’ application, however, the Court found that the chances of further claims being lodged or other creditors coming to light were remote. The manufacturer had ceased trading nine years ago and the known creditors had been kept out of the money in the liquidators’ hands for a considerable period.