UK High Court orders £11 million distribution and makes landmark cost ruling in investment bank special administration

What happens when joint special administrators fail to return client assets for over four and a half years after an investment bank enters special administration? 

Our UK litigation team has secured two significant judgments in the Dolfin Financial (UK) Limited special administration. The High Court ordered an unprecedented interim distribution of over £11 million for our client Firestone Financial Assets Ltd, and subsequently made a landmark costs ruling that stripped the administrators of any right to recoup their costs from the very client assets they were appointed to manage.

Background

Our client, Firestone Financial Assets Ltd (Firestone), was a client of Dolfin Financial (UK) Limited, an investment bank which entered into special administration in June 2021. Following significant delays in the return of assets and limited progress by the joint special administrators (JSAs), we applied to the High Court for an interim distribution of client money.

Under the Investment Bank Special Administration Regulations 2011, Objective 1 is to ensure the return of client assets as soon as is reasonably practicable — typically within months, not years.

Competing applications

Firestone brought its application in January 2025 seeking a court order that 90% of client money claims be distributed, with a 10% retention to cover all client money costs.

Months later and following the pressure of the Firestone application, the JSAs issued their own application asking the court to approve a so-called 'Protocol' and asserting that the amount of any interim distribution should be only 66%, with the 34% retention covering both client money and custody asset costs (e.g. stocks and shares), despite not having client consent for this approach.

The court's decision

The court was critical of the JSAs' approach, describing their application as having no practical utility and finding that the Protocol was over-engineered and added a layer of unnecessary complexity to a straightforward process.

The court also found that, despite spending over a year developing the application, no substantive progress had been made towards achieving the objectives of the special administration in the meantime, including the return of client assets.

The court ultimately ordered, in line with Firestone's submissions, that 90% of the client money claims should be declared by 31 January 2026.

Firestone has now received over £11 million into its accounts from this interim distribution, with a further distribution of approximately £9 million in custody assets being pursued in the near future.

This is a striking judgment, given that the JSAs are court-appointed officials and the court typically lends considerable weight to their decisions on the appropriate steps to manage the special administration.

Costs judgment

On 24 April 2026, the court handed down a further judgment addressing the costs of both the JSAs' application and Firestone's application.

The court ordered the JSAs to pay Firestone's costs of the JSAs' application on the indemnity basis, finding that the JSAs' application was fundamentally flawed at the outset and was never going to achieve anything of value to the special administration. 

More significantly, the court denied the JSAs any right to recoup their costs — including their own costs and the costs they were ordered to pay Firestone — from the client assets in the special administration. The court critically held, in line with Firestone's submissions, that 'the JSAs’ approach was so ill-conceived as to amount to misconduct or serious mistake and this precludes recoupment' and that 'it would be unjust to allow Firestone (or any other client or creditor of the Company) to bear the economic burden of the costs incurred by the JSAs'. 

The JSAs were therefore personally liable to pay these costs.

Practical considerations

These judgments together provide important guidance for clients of financial institutions in special administration:

• Act promptly: Where administrators are failing to progress the key objectives of any insolvency regime, clients should proactively assess their options and not wait indefinitely for the return of their assets.
• Challenge delay: The courts will hold administrators to their statutory obligations. Unexplained delay spanning years will attract judicial scrutiny.
• Scrutinise retention levels: Administrators cannot unilaterally decide to retain funds from one category of assets to cover costs relating to an entirely different category without proper justification and consent.
• Hold administrators to account on costs: Where administrators have pursued unnecessary and ill-conceived applications, the court may not only order them to pay costs on the indemnity basis but may also deprive them of the right to recoup those costs — and their own costs — from client assets.
• Legal advice does not protect against unreasonable conduct: The court confirmed that a wholly unreasonable application is not made reasonable — or less unreasonable — simply because it was pursued on legal advice.

Conclusion

While the courts generally afford considerable deference to court-appointed administrators, these judgments demonstrate that such deference has limits. 

In finding that the pursuit of an unnecessary application could amount to misconduct, and on that basis denying the administrators any right to recover their costs from client assets, the court has reinforced the importance of the statutory objectives underpinning the special administration regime. The decisions also demonstrate that clients affected by prolonged delays may have effective avenues to challenge inaction and protect the value of assets available for distribution.

If you would like further information on special administration proceedings or require assistance relating to the recovery of client assets, please contact Henry Farris or Ciara Samuels.