Undertakings given on the appointment of a provisional liquidator—Abbey Forwarding v HMRC

Undertakings given on the appointment of a provisional liquidator—Abbey Forwarding v HMRC

How and to what extent can undertakings given on the appointment of a provisional liquidator be enforced by the company in liquidation? Matthew Weaver of St Philips Chambers comments on the first reported decision on these issues.

Original news

Abbey Forwarding Ltd (In liquidation) v Revenue and Customs Commissioners [2015] EWHC 225 (Ch), [2015] All ER (D) 91 (Feb)

The applicant company was investigated by the respondent Revenue and Customs Commissioners (HMRC). HMRC gave an undertaking to abide by freezing orders. The applicant brought proceedings, seeking an inquiry as to damages to be carried out on the undertaking. The Companies Court held that, on the evidence, none of the reasons adduced by HMRC would make it inappropriate for the inquiry for damages to occur.

What was the background to the case?

The company in question was wound up by the court on 18 March 2009 pursuant to a petition presented by HMRC on 4 February 2009. The petition was based upon assessments of excise duty raised by HMRC but not, at the date of the petition, served on the company so as to create, by statute, a debt (subject to appeal by the company). On the same day as the petition was presented, HMRC applied, without notice, for the appointment of a provisional liquidator. The application was based principally on the alleged fraudulent behaviour of the company which, it was said, gave rise to the assessments of unpaid excise duty. The court appointed the provisional liquidator on 4 February 2009.

Immediately following the appointment of the provisional liquidator, a worldwide freezing order against three of the company's four directors was sought and obtained in aid of misfeasance proceedings which the provisional liquidator undertook to issue against those directors on the grounds of their part in the company's alleged fraudulent activities.

HMRC gave an undertaking in damages on the appointment of the provisional liquidator and provided the

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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.