Does the clock stop in insolvency?

This article was co-authored by Mololuwa Olanrewaju, trainee solicitor.

Last week, the Court of Appeal handed down a decision in the case of Office Properties v Adcamp LLP [06.02.26] which dealt with adding defendants to a claim after the expiry of limitation, focussing on successor practices following insolvency. This is the latest case on the impact of limitation when dealing with claims under the Third Parties (Rights Against Insurers) Act 2010 (the 2010 Act).

In the current economic climate, many companies are entering liquidation or other insolvency events. This is especially the case in the construction sector and consequently, insurers are being faced with increased claims brought under the 2010 Act.   Under the old law (Third Parties (Rights Against Insurers) Act 1930), an insolvent company meant that time was suspended for limitation purposes, whilst judgment against the insolvent company was obtained to then bring the claim against insurers. But does that still stand under the 2010 Act?

In 2025, the courts decided two cases, namely Transworld Payment Solutions v First Curacao and Office Properties v Adcamp LLP which dealt with this issue, namely, whether insolvency stops the limitation clock and what happens after an insolvent company is added to proceedings after limitation. In this article, we explore whether a limitation defence can still be available in those situations.

Suspending Limitation

In Transworld v Furst Curacao, Transworld Payment Solutions (TWPS) provided marketing and related services for First Curacao International Bank (FCIB). The claimants alleged that FCIB and its owner dishonestly assisted 19 UK companies engage in VAT fraud between 2003 and 2006 by providing them with banking facilities.

FCIB raised several defences, including limitation. In reply, the claimants argued that the six-year limitation period froze when FCIB became insolvent.

The case was ultimately dismissed on the basis that a foreign insolvency process did not suspend limitation. However, it was said by Leech J (obiter) that claims made under the 2010 Act would fall outside of liquidation (so the limitation clock would continue running) but 1930 Act claims would fall in liquidation (suspending time).

Whilst this is useful, there is still no definitive answer and will likely be explored further by the courts – perhaps in 2026?

On a similar issue, the court also considered the question as to whether a successor defendant can be added to proceedings after the expiry of the limitation period. This is common when a company becomes insolvent and a claimant seeks to claim against a successor company. 

Amending a claim after liquidation – how does this affect limitation?

In Office Properties v Adcamp LLP, the claimant alleged it had received negligent advice from its solicitors, (the defendant) in January 2017, and that it had suffered resultant loss and damage. Following the issue of proceedings but before service, the claimant sought to amend the identity of the defendant and add in another, after the limitation period had already expired.

It was held at first instance that no permission was required for the amendment by the claimant and in the event that it was, permission would have been allowed.  This is because an amended claim is treated as made on the date of the original action (which was in time) and the substance of the claim remained unchanged.

The defendant appealed to the Court of Appeal and judgment was handed down last week, on 6 February 2026.

The Court of Appeal allowed the defendant’s appeal and stated that there are two relevant categories for the purposes of limitation:

1. Where the claimant intended to sue the entity which had done the work complained of and believed the named defendant was that entity.
2. Where the claimant knows the named defendant had not done the work but wrongly believed it has acquired the liabilities of the entity who did do the work.

The Court of Appeal held that substitution can be permitted in category (1) but not (2).  In reaching this decision, Zacaroli LJ (giving the leading judgment) commented that the Court of Appeal are unable to interfere with the first category as that is a matter for the Supreme Court to consider. In making this statement, the Court of Appeal have opened the gateway or left it to the Supreme Court to consider whether claims falling into category 1 are still permissible. 

Comment

The two cases explored in this article demonstrate when a limitation defence is available to insolvent and successor companies. The decision in Transworld seems logical since, under the 2010 Act, the purpose was to make it easier for a party to pursue an insurer following a company’s insolvency. So it has to follow that time continues for limitation purposes and limitation is still available for those defending the claim to argue. It is a useful argument, since limitation can provide a complete defence to a claim, regardless of the merits of the allegations made in the claim.

The Court of Appeal also confirmed that it will not allow substitution where a claimant knows it has sued a different entity but wrongly believes it has acquired the liabilities of the original entity. Clearly, caution has to be taken into account when suing a supposed successor company and thorough enquiries will need to be made or parties may find themselves out of time to sue the right company – and therefore out of pocket. Limitation therefore continues to be a useful defence for defendants alike facing such claims, particularly those involving insolvent and successor companies.