- Meaning of ‘associate’ (person having control of a company) interpretation of a ‘person connected with the company’ in a claim for preference (Re CGL Realisations)
- What are the practical implications of this case?
- What was the background?
- What did the court decide?
- Case details
Restructuring & Insolvency analysis: The liquidator of CGL Realisations Ltd applied to strike out part of Darty Holdings’ (as successor to Kesa International Ltd (KIL)) defence to a preference claim. The defence pleaded that KIL was not connected to Comet at the time that Comet made an allegedly preferential payment to KIL. Darty’s cross-application sought to determine the question as a preliminary issue. Darty denied any connection on the basis that the alleged preferential payment was part of a wider transaction in which its parent, Kesa Holdings Ltd (KHL), sold the entire shareholding of Comet, thereby severing the connection. The court decided the issue in favour of the liquidator, holding that (i) as a matter of construction of the relevant contractual agreements, the alleged preferential payment took place prior to completion of the transaction that transferred the shareholding; and (ii) the sale of the shareholding in Comet did not preclude the application of section 435(10)(b) of the Insolvency Act 1986 (IA 1986) because in the period between a binding sale being concluded and completion of the same, KHL remained ‘entitled to exercise’ its voting power, which in this context meant ‘entitled as between himself and the company in which it held the shares’. Written by Tiran Nersessian, barrister at 4 Stone Buildings.
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