Examining the correct basis of valuation—Ingram v Ahmed

Examining the correct basis of valuation—Ingram v Ahmed

Where a debtor’s share transfer is void and the shares are returned but now have a lower value, is the trustee in bankruptcy entitled to the value of shares as per the date of the transfer? Francis Collaço Moraes, barrister at Three Stone, explores the Chancery Division’s decision in Ingram v Ahmed.

Original news

Ingram v Ahmed [2016] EWHC 1536 (Ch), [2016] All ER (D) 11 (Jul)

Following the respondents’ acceptance that the transfers of the first respondent’s minority shares in three companies to the other respondents (his siblings) were void because they were effected after he had been presented with a bankruptcy petition, the Chancery Division held that the applicant trustees in the bankruptcy were entitled to the value of shares as at the date of the transfers. The respondents had argued that such relief would be unprecedented where the shares had been returned and that the trustees had not pleaded or proved actual loss. The court held that the trustees had not been required to plead actual loss, but had proved it, and that the second to the fifth respondents had not acted in good faith and were jointly liable for the loss caused by the fall in value of the shares.

What was the background to the case?

After the presentation of the bankruptcy petition on 23 January 2007, the first respondent had entered an individual voluntary arrangement that was passed as a result of the votes of family members, who claimed to be creditors. That arrangement was successfully challenged in prior proceedings and a bankruptcy order was made on 21 April 2009. Following the appointment of the trustees in bankruptcy, it was asserted that certain shares owned by the bankrupt had been transferred in 2007 to his brother after the presentation of the petition. Some of the shares were subsequently transferred to the other siblings and then transferred back to

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.