The importance of evidence to support a conspiracy theory—Capital For Enterprise Fund A LP v Bibby Financial Services

The importance of evidence to support a conspiracy theory—Capital For Enterprise Fund A LP v Bibby Financial Services

Simon Mills, barrister at Five Paper, and Harold Brako, partner at Shoosmiths LLP, discuss Capital For Enterprise Fund v Bibby Financial Services and argue that the case serves as a reminder about the dangers of pleading a claim in conspiracy without first rigorously analysing the available evidence.

Original news

Capital For Enterprise Fund A LP and another v Bibby Financial Services Ltd [2015] EWHC 2593 (Ch), [2015] All ER (D) 117 (Nov)

The Chancery Division considered whether there had been an unlawful means conspiracy in circumstances where the director of an insolvent company had conspired to transfer the assets of that company to a company that he controlled. The court held that, in the circumstances, the claimants had failed to establish the loss they had alleged in the action they had brought for damages. Accordingly, the claim failed.

What was the background to the case?

A software company (Qire) became insolvent, and a director and shareholder (Mr Cooper) was advised by an insolvency practitioner who suggested that Qire should enter into a pre-pack administration to enable its assets to be sold to a newco (Qivox), a company owned by Mr Cooper (30%), and one of Qire’s principal creditors, Voxeo (70%). It was inevitable there would be a shortfall for the creditors, including the claimants. Bibby agreed to provide finance to Qire and Qivox by purchasing their debts, but Mr Cooper did not inform the board of Qire about the planned restructure. Bibby then purchased the debts of Qire and it entered administration. Qivox continued the business of Qire using its software, but Capital For Enterprise Fund (CFE) and Maven Capital Partners (Maven) blocked the sale of Qire’s assets to Qivox. The claimants lost their £2m investment in Qire.

The claimants, as assignees, subsequently compromised any claims they had against Mr Cooper, Qivox and Voxeo and transferred Qire’s software and

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