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The Great Gatsby and Insolvency: The Insolvency and Companies Court considers a complex web of transactions where ‘nothing is as it seems’ in (AFM (1932) Ltd v Belisco Estates Ltd)

Published on: 12 January 2022
Published by: Produced in partnership with Mr Darragh Connell of Maitland Chambers
  • The Great Gatsby and Insolvency: The Insolvency and Companies Court considers a complex web of transactions where ‘nothing is as it seems’ in (AFM (1932) Ltd v Belisco Estates Ltd)
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • Case details

Article summary

Restructuring & Insolvency analysis: Pursuant to an application issued by the joint liquidators of AFM (1932) Ltd (AFM), the Insolvency and Companies Court was required to consider a complex web of transactions to discern whether there was any legitimate justification for payments made by AFM. The payments were in respect of construction works carried out at an Essex property owned by a company registered in the British Virgin Islands, Belisco Estates Ltd (Belisco) and for which AFM had received no payments in return. In assessing the relevant evidence and considering the contractual documentation relied upon by Belisco, the court repeatedly cited one of the themes of the F Scott Fitzgerald novel, ‘The Great Gatsby’, that ‘nothing is as it seems’. Insolvency and Companies Court Judge Jones ultimately rejected the arguments raised on behalf of Belisco and held, subject to an account and pleading issues, that there was a debt liability owed to AFM by Belisco. Notably, the court applied Rule 14.25 of the Insolvency (England and Wales) Rules 2016, SI 2016/1024 (IR 2016) in finding that Belisco were not entitled to set off payments purportedly made by it and on its behalf to discharge liabilities said to be owed by AFM to third parties. Written by Darragh Connell, counsel instructed by Howes Percival LLP on behalf of the joint liquidators of AFM (1932) Ltd. or take a trial to read the full analysis.

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