Court grants injunctive relief to trustees without notice—Wood v Baker

Court grants injunctive relief to trustees without notice—Wood v Baker

Summary

HHJ Hodge QC has granted what are essentially freezing injunctions in favour of joint trustees in bankruptcy over the businesses and assets of a number of corporate respondents. He also granted injunctions restraining individual respondents from dealing with shares in any of the corporate respondents. These corporate entities had been interposed to shelter assets belonging to the bankrupt in question (the first respondent) and the court was satisfied that there was a real risk of dissipation of further company monies by the bankrupt. Therefore, it was necessary effectively to pierce the corporate veil. The relief was granted on a without notice application as the risk of dissipation by the bankrupt, who had to date consistently evaded disclosure obligations, would be exacerbated if notice were given of the relief sought. The applicants were required to give a limited cross-undertaking in damages.

Practical implications

Wood v Baker [2015] EWHC 2536 (Ch)

For obvious reasons, the granting of a freezing order is not undertaken lightly by the court and specific requirements need to be met. This case dealt with a bankrupt who had consistently sought to evade disclosing information as to assets. As a consequence, the court gave slightly more latitude than normal, being a case in which the court considered it legitimate to pierce the corporate veil to enable it to identify the activities and assets of the corporate respondents which the bankrupt owned and controlled. Practitioners need to be aware that such cases are rare and that such relief will be regarded by the court as a remedy of last resort. Grant of the freezing order was balanced with the cross-undertakings, though limited, which were given.

Reasons for the application

The case involved the complex and protracted bankruptcy of Timothy Baker (the first respondent), petitioned in 2005. There have been a succession of trustees in bankruptcy, all trying to trace, track down and unravel the bankrupt's property and affairs while he has made concerted efforts (to the point of imprisonment) to conceal his assets, evade his obligations and avoid co-operating with the trustees.

The current joint trustees were appointed relatively recently with renewed intention to realise assets for the petitioning creditor. This momentum and the application were assisted by recent information from HM Revenue and Customs regarding tax malpractices at some of the corporate respondents which were apparently 'payroll' companies.

The draft application notice sought declarations that the business and assets of the corpora

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About the author:
Eleanor qualified in 1998 into the insolvency team at ASB law. She became a partner in 2005, and went on to head up the Recovery & Insolvency team. Whilst traditionally specialising mainly in contentious corporate insolvency matters, in recent years she has moved into the non contentious arena, in particular specialising in company administrations.