• JSC BTA Bank v Ablyazov & Anor [2018] EWCA Civ 1176

    Where a transaction challenged under s 423 IA can be said to have had more than one purpose, there is no requirement that the prohibited statutory purpose of putting assets beyond the reach of claimants must have been a ‘substantial’ purpose of the transaction before relief will be granted. The relevant enquiry is simply whether the transaction was entered into for the prohibited purpose at all. Play There is no rule of law that states that if a debtor knows, at the time of entering into the relevant transaction, that he was facing claims, the court must find, unless the debtor provides evidence to the contrary, that the transaction was entered into for the prohibited purpose. The Insolvency Act 1986 contains no presumption to that effect and the court held here that there was no reason for the courts to invent one. At best, such knowledge on the part of the debtor may, depending on all the circumstances of the case, support an inference that the transaction was entered into for the prohibited purpose. With regard to whether the claim under s.423 was statute-barred, the court held that the limitation period which applied here was six years, as it was a sum recoverable by statute and therefore fell within s.9(1) of the Limitation Act 1980. The six year period began to run from the date of the transfer on 26 February 2009. This being the case the claim was statute-barred on the face of it, as it had been issued in December 2015.  Nevertheless, the bank had relied upon s.32 of the 1980 Act, and this provides for postponement of the limitation period in certain cases of fraud, concealment or mistake. However, although the bank's case was that Mr Ablyazov snr had been guilty of fraud or concealment, the bank did not allege that Madyar Ablyazov (his son) was also guilty. Because of that, and although the bank’s case at trial was that Mr Ablyazov snr had been guilty of fraud or concealment, it was not alleged that his son was so guilty. So, the issue became whether the limitation period was postponed as against Madiyar Ablyazov on the basis that he was “claiming through” Mr Ablyazov snr. The court held that he was and that the claim (if it had been well founded) would not have been time barred.  

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    Loveridge v Povey and Ors [2024] EWHC 329 (Ch)

    Here a company shareholder attempted to challenge the administrators' proposal to rescue a balance sheet solvent company by securing additional funding, instead of selling the business. The shareholder wanted to sell the business and assets. Play The application of Michael Loveridge to challenge the administrators' decision formed part of a long-running family dispute. The company in administration was Breton Park Residential Homes Ltd (Breton), and had been run by Michael's mother and brother Audey. A creditor or member of a company in administration may apply to court to claim that the administrators propose to act in a way which would unfairly harm the interests of the applicant, and this is what Michael did. Audey Loveridge transferred his sole shareholding in Breton to Michael and his mother just before his divorce from Melinda. In the course of the ongoing divorce proceedings, which had begun before Michael's application, Melinda challenged the transfer of company shares as a transaction undertaken with the intention of preventing her claim for financial relief. Ownership of the shares in the company was therefore disputed; and the administrators' proposals were challenged.

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    Drelle v Servis-Terminal LLC [2024] EWHC 521 (Ch)

    A judgment obtained for two billion Rubles in a Russian court was not eligible for registration under the Foreign Judgments (Reciprocal Enforcement) Act 1933, and no separate proceedings were taken in the English courts seeking an English judgment. Could the judgment still be a debt which satisfied the grounds of a bankruptcy petition in an English court under s.267 Insolvency Act 1986? Play In this important case, the court rejected a debtor's challenge to a bankruptcy petition which had been presented against him, on the grounds that the debt was disputed. The debt upon which the petition was founded was a foreign judgment granted by the Arbitrazh Court of Yaroslavl in Russia. The debtor had been unsuccessful in all of his appeals against the debt in Russia. The petitioning creditor then issued a bankruptcy petition against the debtor who was by then residing in England, but did so without first seeking recognition of the judgment under Part 7 CPR. However, the High Court rejected the submission that it was necessary to first seek recognition of a foreign judgment under Part 7 before issuing a bankruptcy petition which was founded upon it. The High Court also rejected the submission that the court should not make a bankruptcy order on the grounds of public policy, specifically because it was alleged that a bankruptcy order would be to the exclusive benefit of the Russian state. This was because Gazprom Neft, being the biggest creditor of the petitioning creditor (which was in liquidation), had funded the bankruptcy proceedings and was ultimately owned by the Russian state.

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    Manolete Partners plc v Hayward and Barrett Holdings Ltd and Ors [2021] EWHC 1481 (Ch)

    Where a company is the Claimant and the claim will involve questions of fact, the appropriate originating process is a N1 claim form under Part 7 of the CPR, not an insolvency application. Play This is an important case where the Applicant was an assignee of certain claims. It issued an application including transaction avoidance provisions against two Respondents, and claims against the two other Respondents for breaches of their duty as directors. The claims against the first and second Respondent made under s.239 Insolvency Act 1986 were insolvency proceedings. The claim under s.423 Insolvency Act 1986 was not insolvency proceedings, because if made under that section it cannot satisfy rule 1.35 of the Insolvency Rules 2016. This rule only applies to applications made under Parts I-XI of the Act. Section 423 is in Part XVI of the Act. This fact means that it cannot be 'insolvency proceedings'. This case provides that if r.1.35 cannot be satisfied, and the proceedings are therefore not insolvency proceedings, the originating process is not an insolvency application but rather a claim form under Part 7 of the Civil Procedure Rules 1986. However, in their discretion, where applications have involved both an insolvency application and an application under s.423, courts have often allowed such 'hybrid applications' to proceed as insolvency applications.