At the initial hearing, the High Court found the dividend was caught by section 423 and was therefore invalid. Importantly, it said that a dividend could constitute a transaction at an undervalue. This was an important confirmation, and the High Court has since followed this approach (for example, in Dickinson v NAL Realisations (Staffordshire) Ltd).

[2019] EWCA Civ 27

Restructuring & Insolvency analysis: Following the decision in Wagner v White, Connor Pierce, solicitor at Ashfords LLP, looks at how the courts have been dealing with bankruptcy petitions which lenders have presented against guarantors when the principal borrower fails to repay the loan. Pierce also considers the ways in which guarantors have tried to have the lender’s statutory demand set aside. Wagner v White [2018] EWHC 2882 (Ch), [2018] All ER (D) 16 (Nov)

Restructuring & Insolvency analysis: Connor Pierce, solicitor at Ashfords LLP, examines a High Court judge’s dismissal of an appeal against a deputy registrar’s refusal to set aside a statutory demand made on the appellant, which was based on a personal guarantee he had given the respondent.

Wagner v White [2018] EWHC 2882 (Ch), [2018] All ER (D) 16 (Nov)

What are the practical implications of this case?

The case is a useful authority for statutory demands founded on personal guarantees.

In BTI 2014 LLC v. Sequana SA & Ors [2019], the Court of Appeal upheld the High Court decision that dividends can be challenged as transactions defrauding creditors under the Insolvency Act 1986.

In BTI 2014 LLC v. Sequana SA & Others [2019], the Court of Appeal upheld the decision of the High Court that dividends can be challenged as transactions defrauding creditors under section 423 of the Insolvency Act 1986 (the '1986 Act').

The first instance decision:

Following our previous article, the Court of Appeal dismissed an appeal following the High Court deciding that a moratorium in relation to restructuring proceedings in Azerbaijan could not be extended in breach of the Gibbs rule, allowing two significant creditors to proceed with their claims in the English Courts.

Background

This was a conjoined appeal alongside Bresco v Lonsdale. In this case, Cannon and Primus had already participated in an adjudication, with the decision of the adjudicator favouring Primus. Primus would later enter into a Company Voluntary Arrangement.

The CVA was made on the basis that, although Primus was insolvent at the time, it would be able to satisfy its creditors if it were able to recover from Cannon and other third parties through litigation and adjudication. This was preferable to liquidation.

With the Court of Appeal’s decision in Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd just a few weeks old, it is hardly surprising that people are looking again at the relationship between insolvency law and adjudication, noting that in cases of liquidation where parties have a cross claim, construction law defers to insolvency law.

This was clearly illustrated in Gregg Nowak Ltd v CSS Electrical Distributors Ltd, which came before HHJ Bailey earlier this month.

No. The Court of Appeal upheld the High Court’s original finding, namely that no duty to consider AWA’s creditors had arisen. Whilst AWA’s directors had made provision for the contingent liabilities in question, this did not itself mean AWA was insolvent or close to insolvency. In fact, it was not, and so the duty to consider AWA’s creditors never arose.

Practical implications

Although this decision simply confirms the High Court’s original decision, it emphasises the care and vigilance with which directors of a company need to act when paying dividends.

Introduction

The recent decision of Andrew Burrows QC, sitting as a Judge of the High Court, in Palliser Limited v Fate Limited (In Liquidation) [2019] EWHC 43 (QB), is a useful reminder of the difficulties that can arise where one party (here a tenant) relies on another (its landlord) to take out insurance.

The Facts

In 2010, a fire started at the ground floor restaurant owned and operated by a company called Fate Limited (“Fate”). It was not in dispute that the fire was caused by Fate’s negligence.