Insolvency Act 1986, section 37

Liability for contracts, etc

Part III Receivership

(1)A receiver or manager appointed under powers contained in an instrument (other than an administrative receiver) is, to the same extent as if he had been appointed by order of the court—

(a)personally liable on any contract entered into by him in the performance of his functions (except in so far as the contract otherwise provides) and on any contract of employment adopted by him in the performance of those functions, and

(b)entitled in respect of that liability to indemnity out of the assets.

(2)For the purposes of subsection (1)(a), the receiver or manager is not to be taken to have adopted a contract of employment by reason of anything done or omitted to be done with 14 days after his appointment.

(3)Subsection (1) does not limit any right to indemnity which the receiver or manager would have apart from it, nor limit his liability on contracts entered into without authority, nor confer any right to indemnity in respect of that liability.

(4)Where at any time the receiver or manager so appointed vacates office—

(a)his remuneration and any expenses properly incurred by him, and

(b)any indemnity to which he is entitled out of the assets of the company,

shall be charged on and paid out of any property of the company which is in his custody or under his control at that time in priority to any charge or other security held by the person by or on whose behalf he was appointed.

Definitions used in section 37 3

administrative receiver

(2) In this Chapter “administrative receiver” means—

(a)a receiver or manager of the whole (or substantially the whole) of a company’s property appointed by or on behalf of the holders of any debentures of the company secured by a charge which, as created, was a floating charge, or by such a charge and one or more other securities; or

(b)a person who would be such a receiver or manager but for the appointment of some other person as the receiver of part of the company’s property.

Defined in s.29(2) · see it in the full Act
the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act
company

(1) In this Chapter “company” means a company registered under the Companies Act 2006 in England and Wales or Scotland.

Defined in s.28(1) · see it in the full Act

Cases considering section 37 4

Alma Property Management Limited v Richard George Crompton & Anor.

[2022] EWHC 2671 (Ch) · 28 October 2022Interprets

Interprets section 37 as imposing personal liability on receivers for contracts entered into in performing their functions and providing a priority indemnity from receivership assets, without exhausting a fixed-charge receiver’s wider equitable right to indemnity (see paras [115]-[123]).

Dairy Farmers of Britain Ltd, Re

[2009] EWHC 1389 (Ch) · 18 June 2009Interprets

The references to “the company” in section 37(4) show that section 37 applies only to receivers or managers of a company’s property. It therefore does not impose the statutory contractual liabilities in section 37 on receivers of an industrial and provident society (see paras [39]-[44]).

Mills v Birchall & Anor

[2008] EWCA Civ 385 · 18 April 2008

The court identified the receiver’s personal contractual liability, subject to contrary contractual provision, and corresponding indemnity from company assets as part of the legal context governing receivers. (see para [24])

What each judgment says about section 37 is in the case-law panel in the full Act.