Disposition of property of company in liquidation found to have been backdated (Barons Finance Ltd (in liquidation) v Barons Bridging Finance 1 Ltd and others)

Disposition of property of company in liquidation found to have been backdated (Barons Finance Ltd (in liquidation) v Barons Bridging Finance 1 Ltd and others)
Sarah Phillips, a senior associate in Insolvency & Business Turnaround at Verisona Law, examines a Chancery Division decision that the purported assignment by the third defendant, who carried out money-lending activity through the claimant company, of the claimant’s loan book to the first and second defendant companies, which he also controlled, was void. This was due to a disposition made after the commencement of the claimant’s winding-up, as an undervalue transaction and as a transaction to defraud creditors.
Barons Finance Ltd (in liquidation) (acting by its liquidator Coleman) v Barons Bridging Finance 1 Ltd and others [2018] EWHC 496 (Ch), [2018] All ER (D) 155 (Mar)

What are the practical implications of the judgment?

The court’s decision in this case, which concerned a purported assignment that was found, due to its timing, to be void, was unsurprising. What may be of more interest to practitioners is the background to the decision and the way in which the court approached the matter.

The case had been remitted back to the High Court by the Court of Appeal, following a successful appeal by the third defendant ([2016] EWCA Civ 550, [2016] All ER (D) 79 (Jun)) from an earlier High Court decision ([2015] EWHC 2007 (Ch), [2015] All ER (D) 126 (Jul)), which was set aside. The Court of Appeal had found that the judge at the initial High Court hearing had mistakenly inferred fraud on the part of the defendants, on the basis of the third defendant’s ‘chequered career in the courts’. In addition, the third defendant had not been given an opportunity to respond to the claim at the initial hearing.

While it was the judge who had erred in this regard, the case serves as a useful reminder to insolvency practitioners and their advisors to consider all of the evidence in a matter, and to ensure that defendants are afforded sufficient opportunity to respond to the allegations made against them. It is

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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.