PJSC Uralkali v Rowley & Anor

Administrators conducting a company sale process ordinarily do not assume personal responsibility in tort to prospective bidders merely by providing information, guidance or assurances about the process. A personal duty requires something special beyond the ordinary functions of an administrator acting as the company’s agent.

Administrators must follow the statutory hierarchy in Insolvency Act 1986, remain able to adapt as circumstances change, and act in the interests of creditors as a whole. A viable rescue of the company takes priority over a sale of its business and assets. General statements that a sales process will be fair do not, without more, create a tortious duty to bidders.

General information that other bidders are considering a similar rescue structure will not ordinarily possess the necessary quality of confidence.

Force India Formula One Team Limited entered administration on 27 July 2018. The defendants were appointed joint administrators and conducted a compressed process involving possible rescue by share acquisition and fallback sales of the company’s business and assets.

Uralkali alleged negligent misrepresentations about the criteria for selecting bids, assurances that the process was level, negligence in conducting the process, and breach of confidence arising from discussions between the first defendant and another bidder. Racing Point was selected, first for a proposed rescue and ultimately for a sale of the business and assets.

The issues were whether the administrators owed Uralkali personal tortious duties, whether the process or communications breached those duties, whether confidential information was misused, and whether any breach caused recoverable loss.

1. Claims dismissed. The claims against both administrators were dismissed.
2. Under paragraph 3 of Schedule B1 to the Insolvency Act 1986, an administrator must act in the interests of creditors as a whole and follow the statutory hierarchy. Rescue of the company as a going concern takes priority unless it is not reasonably practicable or another objective would produce a better result. The administrator must remain able to change strategy as circumstances develop and must act quickly and efficiently.
3. An administrator conducting a sales process acts as the company’s agent. Following Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 and Fraser Turner Ltd v PricewaterhouseCoopers LLP [2019] ECA Civ 1290, the ordinary performance of that role does not amount to an assumption of personal responsibility to a bidder. The same conclusion applied to statements about bid criteria, fairness and a level playing field.
4. It would be legally incoherent and practically harmful to impose such a duty generally. It could fetter the administrator’s statutory discretion, encourage defensive and over-lawyered communications, and expose the office-holder to claims by an uncontrolled class of bidders and stakeholders. Exceptional circumstances were possible, but none existed here.
5. The alleged rescue representations were not made as pleaded and, properly understood, the communications conveyed the need for an automatic fallback offer while preserving the statutory priority of rescue. Any reliance would also have been unreasonable in light of the statutory scheme and the subsequent clarification of the bidding requirements.
6. The sales process was conducted fairly. The administrator was entitled to consider information received after the stated deadline where this was necessary to assess a potentially viable rescue. He was entitled, and required, to prioritise a rescue supported by adequate funding and a sufficient fallback sale.
7. The confidentiality claim failed. Applying Coco v A.N. Clark (Engineers) Ltd [1969] RPC 41, the general statement that other bidders were exploring a share acquisition lacked the necessary quality of confidence. The described rescue structure had been devised or communicated by the administrator and was not confidential information originating from Uralkali.
8. Uralkali failed to prove reliance or causation. In any event, the court observed that a lost real or substantial opportunity would have been assessed as part of damages, not quantified at the liability stage.
9. The same reasoning applied to Mr Baker. He was not involved in the relevant representations or disclosure and could not be held liable merely because he was a joint administrator.