Travelex liquidation: Court appoints additional conflict liquidators

In a judgment handed down today, the Court agreed to appoint two additional conflict liquidators in the Travelex liquidation following an application made by Kingsley Napley’s client Rawbank S.A. (“Rawbank”). The existing liquidators are from PwC, and the two new liquidators will be from Grant Thornton. 

Rawbank is the largest bank in the Democratic Republic of the Congo (“DRC”) and is an unsecured creditor of Travelex Bank Notes Ltd (“Travelex”) (part of the Travelex group of companies) for over £48m.

The Travelex Liquidation
 

Travelex sold US dollar banknotes to Rawbank, which it would physically transfer from the UK over to Nairobi and then on to the DRC. From 2013, Rawbank typically ordered $40m–$50m worth of banknotes from Travelex every week.

Between 16 - 19 March 2020, Rawbank placed orders for $60m in banknotes. However, the head company within the Travelex group was experiencing significant financial concerns by this time (exacerbated by the growing Covid pandemic and a serious cyber-attack) and by March 2020 it was unable to provide financial support to all companies in the Travelex group. Travelex engaged PwC as its financial advisors.

Rawbank did not receive the banknotes it paid for and in May 2020 it issued a claim for breach of contract and/or misrepresentation. In July 2020 Travelex was placed into administration.

In August 2023 Travelex moved from administration into creditors voluntary liquidation. The overall deficiency to creditors is estimated to be approximately £433m and Rawbank was accepted as an unsecured creditor for over £48m.

The Application
 

The three joint liquidators of Travelex are all from PwC. In October 2024, Rawbank applied to appoint two insolvency practitioners from Grant Thornton to act as additional liquidators.

Rawbank’s application was made on the basis that the additional liquidators’ appointment would be limited to investigating any potential claims in favour of Travelex, including payments made to another third party after Rawbank had been told that Travelex would not be in a position to provide any refund for the $60m. Rawbank noted that PwC had been engaged by Travelex at the time of some of the relevant transactions, and that this may have affected its approach to such investigations.

The joint liquidators opposed the application partly on the basis that they had already instructed solicitors in 2021 to conduct a review, and those solicitors concluded that there were no viable claims. They also opposed it on the basis that adding officeholders would increase the cost of the liquidation to the detriment of the creditors as a whole.

The key areas of dispute in the application were the potential conflict of interest, costs, the position of the majority creditors, and the question of whether Rawbank was out of time to make the application.

Conflict decision

The joint liquidators of Travelex formed part of the team from PwC that was engaged by Travelex to give advice at the time of some of the transactions that are now under scrutiny in the liquidation.

The Judge held that the respondents were in a position of “actual or at the very least potential conflict when considering what investigations to carry out in respect of [Travelex] in relation to the [pre-administration period] and in determining which claims may or may not be viable.”

The Judge noted that there are occasions when conflicts can be managed in ways that do not require an officeholder to step down, but in this case she concluded that they have not been appropriately managed. She allowed the application and appointed additional conflict liquidators for the purpose of investigating the potential claims, which she concluded would be in the best interests of the creditors as a whole.

The respondents had expressed concerns that Rawbank’s interests don’t align with the interests of the other creditors, but the Judge was clear that the purpose of the appointment would be to investigate claims that will benefit the creditors (or at least the unsecured creditors) as a whole.

Costs

Rawbank undertook to cover all of the costs of the additional officeholders and their proposed further investigations, and all reasonable costs of the respondents (and any other associated costs) incurred in keeping the liquidation open. The latter costs would be either agreed between the parties or fixed by the court.

Majority creditors

The majority creditors, whilst not parties to the proceedings had indicated that they opposed the appointment of additional officeholders. The Judge held that the objections of the majority creditors were not determinative because they were all premised on the respondents not being in a position of conflict in investigating potential claims, which she described as a “false premise”. She also noted that the majority creditors had worked closely with the former Travelex management and so were not to be treated as independent outsiders.

Delay

The respondents argued the application was made out of time, as Travelex had gone into administration more than 5 years ago. However, the Judge considered the evidence as a whole, including Rawbank’s attempts to obtain consent before the application was issued in 2024, and decided Rawbank was not out of time. She also noted it had been open to the liquidators to seek directions from the court at any stage.

The Judge decided the additional officeholders would be appointed for an initial 18 months in order to mitigate the concerns that appointing additional officeholders would delay final distribution and closure of the liquidation. If the officeholders decide that there are no viable claims then the appointment can be terminated earlier.

Conclusion
 

This judgment was time sensitive, as limitation periods for certain potential claims expire next year. It was therefore imperative that if additional claims needed to be investigated then it was done swiftly.

The Judge in this case took a practical and pragmatic approach to the conflict position, deciding that the existing liquidators would remain in office but appointing our client’s choice of additional officeholders notwithstanding that the applicant did not represent the views of the majority of creditors.

The judgment is available here.

About the authors

Daniel is a Partner at Kingsley Napley and leads the Restructuring & Insolvency practice. He was shortlisted for Insolvency Lawyer of the Year at the 2023 IPA Awards.

Marieta specialises in all aspects of contentious corporate and personal insolvency and advises officeholders, debtors, directors, companies, creditors, and other stakeholders in insolvency estates.