The Restructuring, Insolvency and Bankruptcy Group considers the English law position.

Wrongful Trading

Key Points

Where a sole director and shareholder of a company had breached fiduciary duties he could not ratify the breach if the company was insolvent;

Claims against the company in liquidation by dishonest assisting parties could not be set off under rule 4.90 Insolvency Rules against any liability they had in damages for that assistance.

The Facts

On December 21, 2011, in the High Court of England & Wales, Norris J handed down his judgment in Re Virtualpurple Professional Services Ltd [2011] EWHC 3487 (Ch), and in doing so he has become the first judge to cast real doubt on the decision of the Chancellor in Minmar (929) Limited v. Khalatschi [2011] EWHC 1159 (Ch). This is a welcome development and should at least begin the process of finally determining the correct formalities for an out-of-court appointment by directors where there is no qualifying floating charge holder.