A liquidator was appointed following the collapse of a UK construction business which operated in the railway sector. A buyer was found for some of the rolling stock assets.

The liquidator was only willing to sell the assets on the basis that title to those assets was limited to his knowledge, but would offer no guarantee to title. The buyer was not willing to spend £2m without being certain that title was passing unencumbered.

An insurance policy was provided with a limit of £2m and for a period of 5 years. The policy created a synthetic covenant that protected the buyer against a challenge to its title to the assets, or a claim for any debts which may have been secured against those assets. The liquidator avoided personal liability whilst facilitating a sale to a buyer who gained comfort from the provided synthetic covenant.