The recent decisions in Pagden v Ridgley provide timely clarification on the limits of challenging administrator remuneration where the work relates to the realisation of fixed-charge assets. For insolvency practitioners and secured lenders alike, the rulings reinforce a long-established principle: where an asset is subject to fixed-charge security, the costs and fees incurred in realised that asset sit outside the mainstream insolvency regime – and outside the challenge mechanism under r 18.34 of the Insolvency (England and Wales) Rules 2016.

Please note that Annecto Legal can assist insolvency professionals in finding the right funding and insurance to pursue litigation. Litigation finance, funding arrangements and insurance allow insolvency practitioners to pursue claims on behalf of their clients whilst reducing financial risks. There are a wide range of products in the market, and Annecto can help identify the right options for any insolvency dispute – as well as ensuing IPs meet their regulatory requirements in exploring the market.

Background of the case

The original applications in Pagden v Ridgley [2024] EWHC 3047 (Ch) were brought under r 18.34 by Mr Pagden, challenging the remuneration charged by Mr Ridgley in his capacity as administrator of certain companies, along with payments agreed to his solicitors. The fees related solely to the realisation of land subject to a fixed charge and mortgage. These payments had been agreed with Mr Colin, the security trustee who appointed the administrator.

ICC Judge Greenwood dismissed both applications. He held that:

1. Rule 18.34 does not empower the court to review remuneration agreed with a fixed-charge holder relating to the realisation of its security, and
2. A successor security trustee (Pagden) is bound by the agreement made by its predecessor (Colin), through other statutory routes of challenge – such as Sch B1 paras 74 or 75 – may remain available.

Mr Pagden appealed, advancing three grounds:

• That r 18.34 should apply to fixed-charge realisation fees;
• that the court should have exercised its inherent jurisdiction;
• and that the contractual agreement made by its predecessor should not bind him.

The appeal: Reinforcing established boundaries

In Pagden & Anor v Ridgley [2025] EWHC 2674 (Ch), Foxton J dismissed all grounds.

Rule 18.34 does not apply to fixed-charge realisations – Foxton J agreed with ICC Judge Greenwood that fees agreed with a fixed-charge holder for the realisation of its own security fall outside Part 18 of the Insolvency Rules. That is consistent with established principle: fixed-charge assets do not form part of the insolvency estate for distribution, and the costs of realising them are not borne by the general creditor body.

No basis for relying on inherent jurisdiction – The second ground failed because the argument had not been run before the first-instance judge, and no relevant factual findings had been made. Foxton J declined to entertain a new case advanced for the first time on appeal.

No need to address the binding contract point – Given the outcome on the first two grounds, Foxton J did not make findings on whether Mr Pagden was contractually bound by his predecessor’s agreement, through the first-instance conclusion on this point was left undisturbed.

Key takeaways for insolvency practitioners

The decisions are unlikely to shock those practicing in insolvency, but they provide welcome judicial reaffirmation of two important points:

• Secured assets sit outside the collectively insolvency regime – Their realisation is conducted for the benefit of the secured creditor, and remuneration arrangements fall outside the standard oversight applied to insolvency office-holders.
• Rule 18.34 is not a universal route to challenge administrator remuneration – Where fixed-charge realisations are concerned, the security trustee’s contractual agreement remains the decisive mechanism.

However, both judgments expressly acknowledge that other statutory avenues remain available, including challenges under paragraphs 74 and 75 of Schedule B1 to the Insolvency Act 1986. These may be relevant in rare cases where remuneration is alleged to be improper or where the administrator’s conduct warrants closer scrutiny.

Insolvency litigation funding options

When a restructuring professional is looking to pursue claims on behalf of an estate, it is important to be able to show that funding options were considered and that the IP has met their regulatory requirements.

Litigation funding, the assignment of claims and/or ATE insurance can play a pivotal role in assisting insolvency practitioners (IPs) in meeting their obligations. IPs involved in insolvency litigation can make use of the following methods:

After-the-event (ATE) legal expenses insurance – ATE insurance is generally used to protect from adverse costs risks, Security for Costs, and Cross Undertakings in Damages. After-the-Event (ATE) legal expenses insurance is perhaps best thought as a similar to a ‘swap’. For either no upfront fee or a small upfront fee, the insurer takes on all of the risk of the potential adverse costs award.

The claimant has swapped their obligation to pay the defendants in the event of a loss, with the obligation to pay the insurer in the event of a win. This ‘swap’ is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.

For insolvency disputes, insurers will often defer all premium payments until financial recovery is made in the claim. Premium will be capped at a maximum of recovered funds.

Third party litigation funding – In some cases, third party litigation funders may be willing to provide funding for a claim in exchange for a share of any financial settlement or damages awarded. This option can be attractive when there are no funds to pursue a strong case. ATE insurance is often used in conjunction with this type of funding.

Assignment of litigation – Some types of disputes can be assigned to a third party, usually for an upfront payment and a share of recoveries (after costs). This model can be useful in smaller cases when the ATE and CFA model would not deliver value. But giving up control can sometimes be costly, especially on larger disputes.

How can Annecto Legal assist?

When handling insolvency matters, insolvency practitioners are obligated to explore all options available in such cases. At Annecto Legal, we assist a wide range of clients in finding the appropriate insolvency litigation funding, assignment options and ATE insurance.

Annecto Legal regularly assists licensed insolvency practitioners who are involved in dealing with challenging administrator remuneration. If you are in the process of bringing or defending an insolvency dispute and want to find out whether we can assist in helping you fulfil your obligations and secure the right deal, then contact Annecto Legal now.