Insolvent and dissolved companies – can we bring industrial disease claims against them?

March 25, 2026

By Chris Richards

Introduction

Let’s imagine you are a solicitor, who is involved in a fairly straightforward industrial disease claim. There is a Claimant, who is claiming damages for some sort of disease (e.g. hearing loss) which the Claimant says was caused during his employment. There are a number of Defendants, who were each responsible for a small slice of the Claimant’s employment.

The Claimant was employed many years before the present day, and so the Defendant companies are a mixed bag of some who are still trading, and some who are no longer trading. However, each of the Defendant companies have liability insurers acting for them, and the insurers have been defending the claim on their behalf. The insurers have been investigating liability, drafting the statements of case, and so on.

The two sides have not been able to come to a settlement, and so the claim is going to trial shortly. You instruct counsel, and send them the papers. This is shaping up to be a fairly normal one-day trial, on the fast track, where the issues which are going to be explored are fairly straightforward (limitation, breach, causation, and quantum), and your client will win or lose depending on what the Judge decides.

But then, your barrister sends you an email. They have read the papers, and they have seen that one of the Defendants is insolvent, or dissolved. The barrister tells you that is a problem, and that this may derail the trial. But, you think, how can this be? We have a Claimant, we have an insurer, we know what the issues are, we have a trial date, the insurer will pay out if the Claimant wins, can’t we just press on?

Unfortunately, this is a situation I am coming across more and more frequently. I thought it might be helpful to set out in an article why a Defendant being insolvent, or dissolved, matters, and why we need to think carefully about who to sue.

Disclaimer

This article is meant to be a helpful introduction to the subject and is not legal advice to be relied upon. The law changes all the time and the facts of every case are different. Those reading the article are strongly recommended to obtain legal advice before making any decisions which involve the topics discussed in this article.

If any solicitors reading this would like some advice, please feel free to contact my clerks.

Why does this situation arise?

You might be wondering why this situation actually arises at all.

If the Defendant company has not yet been dissolved, and still exists, but is undergoing administration or liquidation, we will see later on that there may be procedural barriers to the company being pursued. Surely, you might think, those representing the company will jump up and down and say that the claim against them cannot be pursued?

Alternatively, if the Defendant company has been dissolved, we will see later on that the company no longer exists, and therefore cannot be sued. Surely, you might think, if the company has been dissolved, there will not be any response to the claim (because, of course, the company no longer exists), and the claim will be left in limbo?

The key thing to remember is that the response to industrial disease claims is essentially managed by insurers. The insurers are the ones who investigate claims. They are the ones who defend them. They are also the ones who pay out if the claim succeeds. The company who was employing the Claimant is often just a name on a piece of paper.

Insurers want Claimants to be able to bring claims against them efficiently and without incurring unnecessary costs. If the company is undergoing administration or liquidation, the Claimant may need to seek permission from the High Court to bring a claim, and that is expensive. If a company has been dissolved, the Claimant may need to apply to restore it to the Register of Companies. This is expensive as well. In either case, if the Claimant succeeds, it is the insurer who will pay those costs. The insurer has an obvious interest in avoiding doing anything which will result in the costs of the claim becoming disproportionate.

It is true that Claimants can sue the insurer directly, under the Third Parties (Rights against Insurers) Acts 1930 and 2010. However, a lot of practitioners are quite scared of these two Acts. They are not clearly worded. You have to carefully work out which of the two Acts applies, and I have seen experienced practitioners get that wrong before.

There is an incentive, therefore, for Claimants to sue the Defendant company directly, and for the Claimant and the Defendant insurer to essentially ‘look the other way’ if it turns out that the company is insolvent (and there are procedural barriers to the company being pursued), or the company is dissolved.

That approach is fine before proceedings are issued. However, once proceedings are issued, there is a danger that a pesky barrister will say that their duty to the Court means that if a claim has been brought in defiance of a procedural bar, or if a claim has been brought against a dissolved company (and so the proceedings are a nullity), they must inform the Judge. Even if the barrister is more flexible, there are plenty of very bright Judges with a company law background who will spot these issues from a mile away.

Worse, if these issues are spotted close to a trial, the trial can end up being adjourned, with costs penalties for whoever is at fault. There is even a possibility that a Judge might be persuaded to strike out a claim which has been brought against a Defendant where there is a procedural bar to them being pursued, or the company is dissolved.

We therefore need to try and make sure that whichever company is being pursued, the claim can actually be pursued against them in the first place.

What are the key concepts for insolvency?

Insolvency is essentially the condition of a company being unable to repay its debts, or of its liabilities being greater than its assets.

There are a number of insolvency procedures in which an insolvent company can take part:

Administration;
Liquidation:
- Compulsory liquidation;
- Creditors’ Voluntary Liquidation (CVL);
- Members’ Voluntary Liquidation (MVL).
Company voluntary arrangements (CVA);
Administrative receivership;
Moratoria under Part A1 of the Insolvency Act 1986.

I will deal with the three main types of insolvency procedure (administration, liquidation and company voluntary arrangements) below.

Administration

When a company goes into administration, the company enters a legal process under the Insolvency Act 1986 which is essentially designed to do the following:

Hopefully, rescue the business;
If that is not possible, achieve a better return for creditors than would be obtained if the company was simply liquidated (e.g. by trading for a period whilst trying to sell the business or assets);
As a last resort, liquidate the assets and distribute the proceeds to creditors.

The administration process is managed by an administrator (a licensed insolvency practitioner). The administrator is appointed by the directors of the company, creditors, or the court.

The administration process ends with one of the following:

The company being rescued;
The company going into liquidation;
The company being dissolved.

Liquidation

Liquidation is the process whereby companies are closed down, and their debts are repaid to creditors out of the assets which are available. Liquidation is what happens when there is no realistic possibility of the company being rescued.

The liquidation process is overseen by the following:

A licensed insolvency practitioner, or;
The Official Receiver.

The job of the liquidator is essentially to raise money to repay the company’s creditors.

A company can go straight into liquidation, or the liquidation can follow on from other insolvency procedures. For example, a company can spend time in administration, and have its assets sold to another company, and once the sale is completed, the company can be placed into liquidation so that the sale proceeds can be distributed to creditors.

There are different kinds of liquidation:

A compulsory liquidation is initiated by the court following a ‘winding-up petition’ (which can be made by creditors or company directors), with the Court making a ‘winding-up order’ to officially place the company into compulsory liquidation;
A Creditors’ Voluntary Liquidation (CVL) is initiated by the directors of the company following a company resolution;
A Members’ Voluntary Liquidation is initiated by the directors of the company, but here, the company is solvent and the creditors will be paid in full.

At the end of the liquidation process, a liquidated company will be dissolved and will cease to exist.

Company voluntary arrangements

A company voluntary arrangement is essentially a binding agreement between a company and its creditors. The agreement will either be completed, and the company returns to health, or if the agreement cannot be kept to, the company may end up in another insolvency procedure (e.g. administration or liquidation).

The company voluntary arrangement is overseen by a licensed insolvency practitioner.

How can insolvency present a barrier to pursuing claims?

When a company enters an insolvency procedure, this often comes an automatic moratorium or stay of legal proceedings against the insolvent company. The idea behind this, I suppose, is that the company is being given some ‘breathing space’.

I will deal with the three main types of insolvency procedure (administration, liquidation and company voluntary arrangements) below.

The event	The prohibition	How to get around the prohibition
Administration (where an application to court has been made for an administrator to be appointed)	Instituting or continuing any legal process against the company or the property of the company (an interim moratorium) Insolvency Act 1986, paragraphs 43(6) and 44(1), Schedule B1	Make an application to the court which has jurisdiction over the insolvency of the company
Administration (where a notice of intention to appoint an administrator has been filed at court)	Instituting or continuing any legal process against the company or the property of the company (an interim moratorium; but this is time-limited and so check paragraph 44 to make sure it is still in effect) Insolvency Act 1986, paragraphs 43(6), 44(2) and 44(4), Schedule B1	Make an application to the court which has jurisdiction over the insolvency of the company
Administration (where an administrator has been appointed)	Instituting or continuing any legal process against the company or the property of the company (a moratorium) Insolvency Act 1986, paragraph 43(6), Schedule B1	Make an application to the court which has jurisdiction over the insolvency of the company
Compulsory liquidation (where a winding-up petition has been presented)	No automatic stay	n/a
Compulsory liquidation (where a winding-up order has been made)	Commencing or proceeding with any action or proceeding against the company or its property Insolvency Act 1986, section 130(2)	Make an application to the court which has jurisdiction over the insolvency of the company
Members’ Voluntary Liquidation (MVL)	No automatic stay	n/a
Creditor’s Voluntary Liquidation (MVL)	No automatic stay	n/a
Company voluntary arrangement (CVA) (where this has been approved)	This depends on the terms of the agreement	n/a

It can therefore be seen that administration and liquidation often prevent claims being brought or continued.

It is arguable, in my view, that the court must be informed of any claim which has been commenced or proceeded with in defiance of a statutory moratorium. It would feel wrong, in my view, to effectively adopt a position of wilful blindness.

What about dissolution?

When a company is dissolved (usually at the end of the administration or liquidation process), the company has no legal personality and does not exist any more. The company is removed from the Register of Companies.

How can dissolution present a barrier to pursuing claims?

The starting point, in simple terms, is that you cannot sue a dissolved company.

This is true even if there is a friendly insurer who is willing to look the other way.

The Court of Appeal explained in the case of Peaktone v Joddrell [2012] EWCA Civ 1035 that it does not matter whether the dissolved company is the Claimant or Defendant. A dissolved company cannot take any active role in litigation:

“[whether the company is the Claimant or Defendant] the purported proceedings are a nullity. The proceedings are a nullity because there is no [active litigation]; one of the parties does not exist.” [paragraph 42; per Munby LJ]

My view is that where a Defendant is discovered to be dissolved, the court must be informed ASAP, to avoid the possibility of the Court being inadvertently misled about whether there is a live Defendant meaningfully taking part in proceedings.

The inevitable next step for any Judge (assuming they are not persuaded to strike out the claim) is to stay the claim insofar as it relates to any dissolved Defendants.

Can a dissolved company be brought back to life?

Under Section 1029 of the Companies Act 2006, an application can be made to the court to restore the company to the Register of Companies. This then allows a claim to be pursued against them.

Section 1032(1) of the Companies Act 2006 discusses the effect of an order for restoration:

“The general effect of an order by the court for restoration to the register is that the company is deemed to have continued in existence as if it had not been dissolved or struck off the register.”

The Court of Appeal in Peaktone agreed that if a claim is commenced against a company during the time when it was dissolved, once there is an order restoring the company to the Register of Companies, this effectively allows the claim to continue.

With this being so, it may not be an abuse of process to commence proceedings against a dissolved company (see paragraph 37 of Cowley v LW Carlisle & Co Ltd [2020] EWCA Civ 227). However, it is clear that this must be combined with a prompt application to restore the company to the Register of Companies (and likely a case management stay to allow this to happen). If there is undue delay, the court may be entitled to strike out the claim.

Conclusions

I hope this article has been helpful.

N.B. the article was amended on 26 March 2026 to slightly expand the ‘How can dissolution present a barrier to pursuing claims?’ and ‘Can a dissolved company be brought back to life?’ sections.

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