Court rules on claim to recover void payments after winding-up petition (Officeserve Technologies Ltd v Annabel’s (Berkeley Square) Ltd)

Court rules on claim to recover void payments after winding-up petition (Officeserve Technologies Ltd v Annabel’s (Berkeley Square) Ltd)

Simon Passfield of Guildhall Chambers acted successfully for the liquidator applicants in an insolvency case to recover a disposition rendered void by operation of the Insolvency Act 1986 (IA 1986). He discusses the practical implications of the judgment.

Officeserve Technologies Ltd and another v Annabel’s (Berkeley Square) Ltd and others [2018] EWHC 2168 (Ch)

What are the practical implications of this case?

This decision is helpful in clarifying the nature of the claim which should be brought in order to recover a disposition rendered void by operation of IA 1986, s 127. It suggests that the ability of the recipient to avoid liability to make restitution to the company will be extremely limited.

However, it should be borne in mind that none of the recipients in the present case sought a validation order. The case also provides a useful reminder of the potential unintended consequences of settling claims and the importance of ensuring that the right to pursue other claims is expressly reserved (if that is intended).

What was the background?

After the presentation of a winding-up petition against it, a company made payments to 43 recipients in the total sum of £205,932.90. The company subsequently entered compulsory liquidation on the petition and accordingly, by operation of IA 1986, s 127, those payments were rendered void.

The liquidators of the company issued a claim against a former director of the company pursuant to IA 1986, s 212, alleging that he had committed various breaches of his fiduciary duties to the company including, inter alia, by causing or permitting the company to make the payments (the misfeasance claim). By the misfeasance claim (which was the subject of the decision of the High Court in Officeserve Technologies Ltd and another v Anthony-Mike [2017] EWHC 1920 (Ch)), the liquidators sought equitable compensation in the total sum of approximately £1.9m.

The liquidators also issued a claim against the 43 recipients of the payments for repayment of the monies which they received (the restitution claims). Between issue and the first hearing of the restitution claims, the liquidators settled the misfeasance claim and the other potential claims which the company had against its directors for £1.1m.

At the hearing of restitution claim, the court had to determine:

  • the judicial nature of a claim to recover payments which are void by operation of IA 1986, s 127
  • whether the settlement of the misfeasance claim precluded the company from pursuing any of the restitution claims

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