Insolvency Preferences—desire to prefer and operative decision (Darty Holdings SAS v Carton-Kelly)

Article summary

Restructuring & Insolvency analysis: In a preference claim arising from the liquidation of Comet Group plc (Comet), liability hinged on when the decision to repay a creditor was taken. In the lower court, Mrs Justice Falk had found that Mr Enoch, a director of Comet, had the relevant desire to prefer when he negotiated the terms of an SPA, in his role as General Counsel to the seller. The SPA envisaged Comet taking certain steps, including repaying a group company owed significant sums. However, the Court of Appeal considered that Falk J fell into error, and allowing the appeal, held that Mr Enoch/Comet made no relevant decision on behalf of Comet at the time the SPA was negotiated and signed and was not party to the SPA; the decision to repay was taken later by the new Board of Comet immediately prior to payment, even if they practically had no real choice. Written by Morwenna Macro, barrister, Five...