High Court refuses late amendment in FROL insolvency case

The High Court of Justice has delivered a significant judgement concerning The Food Retailer Operations Limited (FROL) and its joint liquidators, Malcolm Cohen and Shane Crooks, refusing their application to amend pleadings in a complex insolvency matter. His Honour Judge Hodge KC's decision highlights the stringent requirements for late amendments in commercial litigation, particularly where trial dates are imminent.

Case background

FROL entered administration in February 2017 before proceeding to liquidation in early 2019. The joint liquidators initially sought declarations that a transaction involving the sale of properties and related assets for over £496 million constituted a transaction at an undervalue under the Insolvency Act 1986, seeking to recover substantial losses for creditors.

The case took a pivotal turn following an earlier decision by Fancourt J, who denied the joint liquidators' application to introduce expert evidence on business valuation. The judge ruled that their case fundamentally concerned asset sales rather than a comprehensive business sale, undermining the liquidators' original strategy.

This ruling prompted the joint liquidators to seek permission to amend their claims to address the alleged sale of a business, based on new insights and valuations suggesting the transaction's worth exceeded previous characterisations in their pleadings.

Legal analysis

The court's determination centred on whether the proposed amendments would introduce a new cause of action or merely elaborate on existing claims regarding the undervalue transaction. The applicants maintained that the amendments had merit based on the initial sales agreement, arguing that the business's value significantly exceeded mere asset values and would directly affect creditors' financial recoveries.

The respondents, several companies within the Co-operative Group, contended that the proposed claims were fundamentally altered and would necessitate a different litigation course, potentially jeopardising the trial schedule set for January 2026. They opposed the amendments on grounds of lateness, lack of substance, and potential disruption to proceedings.

Judicial reasoning

Judge Hodge KC acknowledged that whilst no mandatory bar existed against introducing late amendments, the application was classified as "very late" due to its proximity to the trial date. Such amendments carry a heavier burden under legal standards, particularly regarding their potential impact on trial integrity and timeframes.

The judge concluded that the applicants had failed to sufficiently justify the delay or provide adequately detailed particulars to support the amendments. His decision emphasised the importance of presenting clear, substantiated claims that align with the existing case framework.

Significantly, the judgement highlighted the necessity of respecting trial dates to ensure justice for all parties, noting how substantial delays could affect witness memories and overall case dynamics.

Wider implications

This judgement reflects the court's approach to balancing competing interests: the timely administration of justice, procedural integrity, and the urgent need for financial recovery in insolvency contexts. The decision demonstrates judicial discretion in managing complex commercial litigation whilst maintaining procedural fairness.

The ruling reinforces established principles regarding late amendments in high-value commercial disputes. It underscores the critical importance of comprehensive initial pleadings and the substantial hurdle parties face when seeking to fundamentally alter their case close to trial.

The decision serves as a pertinent reminder of the interplay between thorough legal drafting, evidential support, and effective case management in high-stakes insolvency litigation, where procedural lapses can significantly impact stakeholder outcomes and recovery prospects.