- Is a fine imposed by a criminal court a provable debt in a company’s winding up (Re Paperback Collection & Recycling Limited)?
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: In a decision of paramount importance to practitioners in insolvency and environmental protection, the judge held, on an application by the joint voluntary liquidators of the company for directions pursuant to section 112 of the Insolvency Act 1986 (IA 1986), that although a fine imposed by a criminal court triggered by offences committed prior to the entry into liquidation was a debt provable in the liquidation, even if imposed after the onset of insolvent liquidation, where there was a substantial deficiency as regards floating charge creditors, the fine would not impact on the insolvent estate. The judge directed that the liquidation funds representing the proceeds of sale of the company’s assets should be distributed to the floating chargeholders. Written by Lesley Anderson QC, barrister, at Kings Chambers and Hardwicke.
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