Adila Malik considers Officeserve Technologies Ltd (in Liquidation) and another v Annabel’s (Berkley Square) Ltd and others [2018] EWHC 2168 (Ch) where the settlement of claims against a director did not prevent liquidators recovering void payments.
Section 127 of the Insolvency Act 1986 (“IA 1986”) provides that any disposition of the company’s property made after the commencement of the winding up is void.
Following the presentation of a winding up petition (but prior to the making of the order), the company had made various payments to third parties (“the Recipients”) totalling £205,933. The company’s liquidators sought to recover the payments on the basis that they were void under section 127 IA 1986.
After the application seeking repayment had commenced, the liquidators reached a settlement agreement with the company’s director in respect of claims against him for breach of fiduciary duty. HHJ Paul Matthews had to consider what effect such settlement had on the claims against the Recipients for repayment of the £205,933.
The court expressed concerns as to whether the settlement prevented the liquidators from recovering sums from the Recipients. On the face of it, it appeared that all claims against the director in respect of causing or committing the company to make payments after the presentation of the petition had now been extinguished. However, the price of satisfaction of claims against the director, including those in respect of payments made void pursuant to section 127, was less than the face value of those claims. In this case, a clause in the settlement agreement showed that the parties’ intention in entering into the agreement was not to extinguish the claim against the Recipients, and therefore the settlement did not bar the liquidators’ claim in these proceedings. The payments were declared void under section 127 IA 1986 had to be returned to the company.
The judge also considered that section 127 IA 1986 did not hinder the operation of other defences such as estoppel, good faith for value and change of position, which could have been asserted by the Recipients. However, none of the Recipients had formally defended the proceedings and those that had written to the court did not provide evidence that would have founded the defences. It was not for the liquidators to prove the absence of the Recipients’ defence. Accordingly the liquidators succeeded in all their claims against the Recipients.
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