In a compulsory winding up of an insolvent company, a creditor’s claim for a debt in a foreign currency, and any set-off in a foreign currency against such a debt, must be converted into sterling as at the date of the winding up order. The result was to shelter the creditor from the risk of a decline in sterling between the date when the debt fell due and the commencement of the liquidation. But the creditor remained exposed to the risk of a decline of sterling between the commencement of the liquidation and the payment of a dividend. This difference between the position of a judgment creditor and a creditor seeking to prove in a liquidation was, however, a necessary incident of any scheme for the distribution of an insolvent estate, because debts had to be expressed in a common unit of account valued as at a common date if creditors were to rank pari passu in their claims to the deficient pool of assets.
Oliver J said that he considered that the correct analysis was that the contractual debt was converted into the right to prove, and that ‘the obligation of the company . . is to pay whatever is the sterling equivalent [of the foreign currency debt] at [the date of liquidation]’
 1 WLR 757
England and Wales
Cited – LB Holdings Intermediate 2 Ltd, The Joint Administrators of v Lehman Brothers International (Europe), The Joint Administrators of and Others SC 17-May-2017
In the course of the insolvent administration of the bank, substantial additional sums were received. Parties appealed against some orders made on the application to court for directions as to what was to be done with the surplus.
Held: The . .
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Updated: 20 February 2021; Ref: scu.641427