The strange case of the unintentional gifts—Hampton v Elite

The strange case of the unintentional gifts—Hampton v Elite

What happens when a party unintentionally offers payment as a gift? Siward Atkins, barrister at Maitland Chambers and representative of the claimants in Hampton v Elite, explains that companies have to be aware that they are offering a gift if they are to be prosecuted under section 238 of the Insolvency Act 1986 (IA 1986).

Original news

Re Hampton Capital Ltd Murphy and another v Elite Performance Cars Ltd and others; Hampton Capital Ltd v Elite Performance Cars Ltd and others [2015] EWHC 1905 (Ch), [2015] All ER (D) 118 (Jul)

The Companies Court held that a company in administration was entitled to restitution to some degree in respect of payments made out of the company to the defendants. The court dismissed an application by the joint administrators of the company, under IA 1986, s 238, which alleged that the payments to the defendants amounted to transactions at an undervalue, where there was no evidence that the company had ‘dealt’ with the defendants or had entered into a transaction with them, within the meaning of IA 1986, s 238(4).

Briefly, what was the background to this case?

The claimant company, Hampton Capital (Hampton), had been lent £1.4m by a company called Tolent Construction (Tolent) for the purposes of a redevelopment project in County Durham. The project fell through and the money was lost. Tolent put Hampton into administration so that administrators could go in to find out what had happened to the money. It transpired that a shadow director of Hampton, Alick Mayweather, had duped its two official directors into paying out all the money for his benefit. Some of it was used to buy him luxury cars, some of it to buy him gambling chips, the rest to pay his debts. Mr Mayweather had persuaded the directors to make these payments by saying they were for the redevelopment project. They did not question

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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.