An estate does not need to fund or run the recovery of a frozen PSP claim itself. It needs to transfer the right to pursue that specific claim to someone who will. The mechanics of doing that are narrower and more concrete than they might sound, but they turn on a genuine legal question that has to be answered on the facts of the appointment before anything else happens.
Assignment or mandate: two different instruments
Two structures do this job, and they are not interchangeable.
Assignment. The estate transfers legal title to the specific claim — the right to sue the PSP, EMI or acquirer for the withheld funds — to the party pursuing it. From that point, the assignee is the claimant of record. It pursues the claim in its own name, at its own cost, and remits the estate's agreed share of any recovery.
Mandate. The estate keeps legal title and instead authorises another party to pursue the claim on its behalf, typically under a power of attorney or an equivalent authority instrument. The claim remains formally the estate's; the mandated party conducts the work and is compensated from the recovery.
The practical difference is standing, not effort: an assignment generally gives the recovery vehicle direct standing to pursue the claim in its own name, whereas a mandate preserves the estate's legal ownership while outsourcing the practical conduct of the recovery.
Which of the two is available, and which a given regime treats as the cleaner route for an insolvency appointment specifically, is not the same answer in every jurisdiction. This is one of the first issues we consider with the practitioner, not something assumed in advance.
The gatekeeping question
The threshold question is not commercial. It is a question of insolvency law and the terms of the specific appointment: does this administrator, liquidator, curator or trustee have the authority to assign or mandate a claim of the estate without further sanction, or does that authority require the approval of a court, a creditors' committee, or another party?
The honest answer is that this varies — by jurisdiction, by the type of insolvency procedure, and by the specific terms of the appointment. Nothing about this claim class is unusual on that front — it is the same question that would arise for any other claim a practitioner might realise on behalf of the estate. It is answered on the facts of the appointment, at the outset, before either instrument is executed, and it can rule the route in or out entirely.
The no-win-no-fee structure
Once the route is clear, the commercial structure is simple in shape: it is designed so that the estate commits no funds and assumes no litigation risk. The party pursuing the claim funds the legal work, the cross-border correspondence and, where necessary, proceedings, and is paid only from what is actually recovered. If nothing is recovered, the estate owes nothing under the agreed arrangement beyond whatever time was spent on the initial conversation and providing documents already in the file.
The exact commercial terms — the share the estate receives, and how legal costs are treated against that share — are agreed before the assignment or mandate is executed, not after. What matters at the outset is the shape of the deal, not the number: no advance, no exposure, a share of the outcome.
What actually happens, and roughly when
In outline, four stages, following the same framework used across the firm's recovery work generally.
- Assessment. A short review of what is in the file already — the merchant services agreement, settlement statements, correspondence — and a conversation to confirm the gatekeeping question above. No cost, no obligation, and no instrument is signed at this stage.
- Execution. Where the file is worth pursuing and the authority question is resolved, the assignment or mandate is executed. A separate notice is served on the counterparty — the PSP, EMI, acquirer or bank — recording the transfer or authority, as applicable, and directing it to deal with the new claimant (or authorised party) of record from that date.
- Demand and response. A substantive demand is served on the counterparty, citing the contractual and documentary basis for the claim, with a defined response window. Many files resolve here, once the counterparty is dealing with a claimant who is plainly prepared to pursue the matter if necessary.
- Escalation, where required. Where the counterparty does not engage constructively, the claim proceeds to supervisory engagement with the relevant authority, and — where necessary — formal proceedings in the appropriate forum. Settlement remains the preferred outcome throughout.
Timing varies with the counterparty's conduct and the documentary record, in the same way it does for any recovery of this kind — most files that settle do so well before proceedings become necessary, and an uncooperative counterparty adds months, not weeks.
What the estate keeps
Three things, concretely. The estate keeps its agreed share of whatever is recovered, paid out for distribution through the estate in the ordinary course. It keeps the time of the practitioner and their staff, who are not required to run cross-border correspondence with a payment institution's legal function. And it retains the freedom to decide whether to proceed at all — nothing is signed, and no cost is incurred, until the practitioner has had the initial conversation and decided the claim is worth pursuing on this basis.
Nor does the estate necessarily need to retain ownership of the claim once it is satisfied that the route is right for the appointment — pursuing a cross-border payments claim to a satisfactory conclusion is not, as a matter of ordinary administration, something an estate is required to take on itself, and there is no obligation to make it so.
The starting point, in every case, is the same short conversation — see our page for insolvency practitioners for how to arrange one.
This article is for information purposes only and does not constitute legal advice.