• Purkiss v Kennedy & Ors [2024] EWHC 1081 (Ch)

    This case featured another judgment in a group of cases which arose out of schemes which were designed to enable self-employed individuals to avoid the obligation to pay income tax and national insurance on their remuneration. Play The company's problems began with HMRC assessing it for income tax and NIC for around £2.2 million. The company went into creditors' voluntary liquidation without making payment or appealing. The judge in the High Court accepted that “HMRC undoubtedly has a duty to collect tax which is due,” but questioned whether HMRC could have ‘interests’ for the purposes of section 423(3)(b) Insolvency Act 1986 which were affected by arrangements which lawfully reduced or prevented tax arising.

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    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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    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.

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    Invest Bank PSC v El-Husseini & Ors [2023] EWCA Civ 555

    A Fascinating Case Linking Insolvency, Company and Property Laws Play The court has wide powers to prevent creditors being defrauded: transactions at an undervalue can be challenged under section 423 Insolvency Act 1986 even if the debtor is not a party to a transaction or does not have a beneficial interest in the relevant assets. Debtors therefore cannot use corporate structures to avoid their creditors. Unlike transactions at an undervalue in corporate insolvency (section 238) and bankruptcy (section 339), section 423 is not confined to the insolvency context. It has a wider application. Two issues of law were considered by the Court of Appeal in this case in relation to section 423: Whether a transfer to a third party by a company owned and controlled by a debtor can be challenged as defrauding creditors; (the Bank's appeal) and Whether there can be a transaction at an undervalue if the debtor does not have a beneficial interest in the asset which is the subject of the 'transaction' (the Respondents' appeal).