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Claims arising from a fraudulent investment scheme resulting in corporate insolvency (Biscoe (as joint liquidators of Equitable Law Capital Ltd) v Milner)

Claims arising from a fraudulent investment scheme resulting in corporate insolvency (Biscoe (as joint liquidators of Equitable Law Capital Ltd) v Milner)
Published on: 16 April 2021
Published by: LexisPSL
  • Claims arising from a fraudulent investment scheme resulting in corporate insolvency (Biscoe (as joint liquidators of Equitable Law Capital Ltd) v Milner)
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • The third respondent
  • The sixth and seventh respondents
  • The effect of the settlement agreement
  • Case details

Article summary

Restructuring and Insolvency analysis: The applicants (a company in liquidation (‘ELC’) and its liquidators) sought compensation in relation to, among other things, fraudulent trading and wrongful trading against various respondents. ELC’s only business was the running of an investment scheme. The scheme—which had been fraudulent from its inception—failed and ELC went into insolvent liquidation. The two main questions were (1) to what extent various respondents who had been involved in the scheme were liable to pay compensation and (2) whether a settlement agreement entered into with two of the respondents barred the claims against the others. It was held that one respondent, a de facto director of ELC, was liable in wrongful trading, fraudulent trading, misfeasance, and on the ground that payments made to him constituted transactions at an undervalue. The settlement agreement did not bar the claim against him or any of the other respondents (although the claims against the other respondents failed). Written by Nora Wannagat, barrister at 9 Stone Buildings. or take a trial to read the full analysis.

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