Background
The collapse of Carillion in 2018 was arguably the UK's largest corporate insolvency in years, creating a lasting impact through job losses and the derailment of hundreds of public sector projects.
On 20 May 2022 Mr Justice Adam Johnson handed down his judgment in the matter of Swiss Cottage Properties Limited (in liquidation) [2022] EWHC 1495 (Ch). Deloitte, represented by Derrick Dale QC and Ben Griffiths as instructed by DAC Beachcroft LLP, successfully defended a claim for negligence. A copy of the judgment is available here.
Businesses are currently facing unprecedented challenges. DAC Beachcroft is advising the NHS on covid-19 issues, as well as many corporate clients on the business issues arising out of the pandemic, particularly in relation to employees, insurance, continuity and cyber security.
A common query with D&O insurance coverage is whether post-insolvency claims against the insolvent company’s directors and officers trigger the Insured vs. Insured exclusion found in most D&O policies. This issue arises when claims are brought on behalf of the insolvent company against directors in an attempt to recover money for creditors.
In Sharma v Top Brands Ltd [2015] EWCA Civ 1140, the Court of Appeal refused to allow a former liquidator of a company (which was a vehicle for VAT fraud) to rely on the illegality defence to avoid liability for a claim brought against her for breach of duty under section 212 of the Insolvency Act 1986 (IA 1986).
Background
This month in Sharma v Top Brands Ltd [2015] EWCA Civ 1140 the Court of Appeal has again been asked to grapple with the question of when the illegality defence is available to defendants to actions brought by an insolvent company where the losses claimed are arguably tainted by the company's own fraudulent actions. In this instance the question for the court was whether the defence was available to a former liquidator of a company seeking to defend a claim brought against her for breach of duty under section 212 of the Insolvency Act 1986 (IA 1986).