In Skandinaviska Enskilda Banken AB v Conway & another [2019] UKPC 36, the Privy Council upheld the decision of the Court of Appeal of the Cayman Islands that the appellant bank, SEB, was required to repay redemption payments held to be preferences notwithstanding that it had received the funds in the capacity of nominee, and had already distributed the funds to the beneficiaries without any ability to recover them.

Facts

A Sheriff has answered this question in the affirmative and given reasoning which will be helpful for trustees (under a trust deed) in considering whether to raise sequestration proceedings against the debtor.

Background

The Sheriff Court at Airdrie was asked in April 2019 to comment on the ability of a trustee under a trust deed to summarily apply for a debtor's sequestration in the case of David Mond v Craig Booth.

The High Court decision in Burnden Holdings clarifies the law on retrospective attacks on the declaration of dividends.

SUMMARY

In certain circumstances, if a claim is proven, the defendant will be able to offset monies that are due to it from the claimant - this is known as set off.

Here, we cover the basics of set off, including the different types of set off and key points you need to know.

What is set off?

Where the right of set off arises, it can act as a defence to part or the whole of a claim.

Background

The case concerned royalty payments, which a creditor had a contractual right to receive, arising from iron ore produced at a mine in Sierra Leone.

The parent company of the Sierra Leonean mining company went into administration and administrators from PwC were appointed. The creditor's director called the administrators to stress the importance of bringing the royalty payments to the attention of a third party purchaser.

The administrators subsequently sold the mine, but did not make the purchaser aware of the royalty issue.

Seafood Shack Ltd v Alan Darlow [2019] EWHC 1567 (Ch)

A lease of restaurant premises was granted to a company that did not exist; there was no legal basis for correcting the lease, and the similarly-named company claiming rights was held to have none.

When can an insolvency practitioner pursue directors for declaring unlawful dividends?

Does an insolvency practitioner need to demonstrate that the directors knew, or ought to have known, that the dividend was paid unlawfully, or is it a strict liability issue?

Can director/shareholders rely on professionally prepared accounts to avoid liability?

In this week's update: directors implementing a management buy-out did not owe fiduciary duties to the other shareholders and a distribution was valid despite the relevant accounts not being in the usual format.

Directors did not owe fiduciary duty to shareholders

The High Court has held that the directors of a company did not owe a fiduciary duty to the company’s shareholders when implementing a management buy-out (MBO).

What happened?

Whilst receiving a judgment in your favour may feel like the culmination of a potentially lengthy legal process, it may be just the first step (though an important one) on the path to financial recovery. In our latest insight, we look at how and when you can enforce a judgment to realise payment of any damages or costs which have been awarded.

What is enforcement?

In this week's update: a distribution was valid despite discrepancies in the accounts justifying the dividend and an examination of vexatious resolutions.

Court considers whether demerger by dividend was valid (part 2)