Bank Notes

T - Transaction avoidance

12/10/18

HELLARD v GRAISELEY INVESTMENTS LTD [2018] EWHC 2664 (Ch)

In an application under s 238 Insolvency Act 1986 challenging a transaction as at an undervalue, liquidators should plead or define the transaction and address in their evidence the value alleged to flow between the parties to it. As this had not been done, the application did not get off the ground. Further, on the evidence the court was satisfied that there had been an error in the way a transfer of fixtures and fittings had been documented so the transfer had been void for mistake and a transfer back had caused nothing to be lost. The applicant liquidators had failed properly to analyse the relevant journal entries and should not have made allegations and insinuations going beyond the pleaded case.

13/9/17

GLOBAL CORPORATE LTD v HALE [2017] EWHC 2277 (Ch)

A claim was made to recover payments from a director on grounds that the payments had been unlawful dividends, a preference/undervalue and paid in breach of fiduciary duty. The claim failed. The payments had not been dividends because at the time of making them the director had not made a decision to pay them as dividends. He had intended to leave that decision until the accounts were prepared and indicated that there were sufficient distributable reserves. There had been no undervalue or breach of fiduciary duty because the respondent had a claim to the monies for his services. The claimant had no title to sue to recover a preferential payment, as that claim had not been assigned to the claimant and remained with the liquidator who was not a party to the application.

28/7/17

OFFICESERVE TECHNOLOGIES LTD (IN LIQUIDATION) v ANTHONY-MIKE [2017] EWHC 1920 (Ch)

A settlement agreement between a company and a former director which released the director from claims and had been concluded before the company went into compulsory liquidation, was void under s 127 Insolvency Act 1986 and would not be validated retrospectively.

30/9/15

SAHAVIRIYA STEEL INDUSTRIES UK LTD v HEWDEN STUART LTD [2015] EWHC 2726 (Ch)

On application by a company, the court made orders under s 127 Insolvency Act 1986 validating payments to be made by after the date of presentation of a winding-up petition. The payments were required to effect restructuring plans which presented a prospect for unsecured creditors to recover debts owed by the company.

3/4/14

BUCCI v CARMAN; RE CASA ESTATES (UK) LTD [2014] EWCA Civ 383

In proceedings under s 238 Insolvency Act 1986 to recover payments made at an undervalue, a company was held to be insolvent at the relevant time. Although it had been able to pay its debts as they fell due, it had only been able to do so by borrowing funds held as deposits for by third party property purchases, thereby getting deeper into long-term debt.

10/5/13

R C BREWERY LTD v COMMISSIONERS OF HM REVENUE & CUSTOMS [2013] EWHC 1184 (Ch)

The court refused to make an order under s 127 Insolvency Act 1986 validating payments by a company to solicitors and counsel to resist attempts to wind-up the company. The company did not appear to have a genuine defence and had merely been trying to buy time.

27/3/13

CARILLION CONSTRUCTION LTD v HUSSAIN [2013] EWHC 685 (Ch)

Letters of support addressed by a parent company to directors of a subsidiary stated that the parent would provide financial and business support to the subsidiary to ensure it continued as a going concern. On their true construction the letters did not give rise to obligations enforceable in law. They were only intended to enable the directors of the subsidiary to consider whether it was appropriate for financial statements to be prepared on a going concern basis. They did not purport to be a contract and gave no indication that any consideration had been given. As a result a creditor of the subsidiary had no real prospect of proving that the subsequent withdrawal of support was a transaction intended to defraud creditors within s 423 Insolvency Act 1986. The assertion that there had been a deal to release the parent from liability was based on speculation in the absence any evidence that the companies had ever considered the letters binding.

Comment

22/2/13

HUNT v HOSKING [2013] EWHC 311 (Ch)

A claim by a liquidator to set aside payments made to accountants as transactions at an undervalue under s 238 Insolvency Act 1986 was bound to fail because the payments were taken from the accountants' client account so there was no transaction as such between the company and the accountants.