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Technology Harnessed to Reduce Costs of Holiday Group Insolvency

holiday sunsetPaperwork costs of insolvency proceedings in respect of large companies with many clients can be very high. However, one High Court case concerning a troubled group of holiday companies showed that technology can be harnessed to achieve economy in the interest of creditors.

The four companies had between them over 14,000 customers when they went into administration. The majority of them would suffer no loss as either their holiday bookings would be honoured or they would be able to claim full refunds. However, all of them were entitled by the Insolvency Rules 1986 to be kept fully informed of the proceedings and the administrators would be obliged to serve at least five notices on each of them, at very substantial cost.

However, the administrators had email addresses for over 9,000 of the customers and the Court found that, given the inordinately high cost of providing hard copies, it would be permissible to serve documents upon them electronically. A single notice, directing customers to a website on which all required information would be displayed, would be sufficient to comply with the rules.

The administrators were also concerned that publication of a list of the customers would create a ready-made client database of which competitors might take advantage. Given the commercial sensitivity of the information, the Court permitted more limited disclosure of creditor details than would normally be required under the rules.