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Insolvency Monthly Briefing: February 2006 RECENT CASES Director's Disqualification Green –v- Secretary of State for Trade & Industry [2005] All ER 255 When considering whether a person is unfit to be involved in the management of a company under Section 6 of the Company Directors Disqualification Act 1986, the Court is permitted to take into account a person’s conduct not only in relation to the company that gave rise to the proceedings, but also in relation to the management of any other company of which he/she is or was a director, provided that it is relevant to the issue of fitness to be a director and not merely of prejudicial value. Insolvency – Corporate Investment Invoice Finance Ltd –v- Limehouse Board Mills Ltd [2006] EWCA Civ 9. C.A. (A), the Petitioner presented a petition to wind-up (B), the debtor on the basis of a disputed debt. The petition was dismissed and an order for costs was made against (A). (A) then commenced normal court proceedings for recovery of the same debt. (B) made an application to the Court requesting that the claim be stayed pending payment of those costs. (A) assigned part of the debt in dispute to (C) who was joined into the proceedings as a Claimant and upon the further application of (B), was also made subject to the stay of proceedings. Upon the appeal of (C), it was held that the Court has an inherent jurisdiction to prevent a claimant subjecting a defendant to a second claim that is substantially the same, without satisfying the obligations under the first claim. As both the petition and claim related to payment of goods delivered and (C) was the successor in title to (A), it was fair to require (C) to pay the costs of the petition before the stay would be removed. The appeal was, therefore, dismissed. Insolvency – Personal Demarco –v- Perkins & Anor (unreported) This case involved section 261 (1) (a) of the Insolvency Act 1986 (“the Act”). (B), the bankrupt, who was facing bankruptcy, primarily due to a claim by the Inland Revenue, was made bankrupt seven weeks after the petition was presented by the Inland Revenue. (B) was never in a position to pay his debts in full, but following discussions with his Insolvency Practitioner, an IVA attractive to creditors was proposed, followed by an annulment of the bankruptcy order. (B) brought a claim for damages against his Insolvency Practitioner, because he had lost the right to obtain an annulment of the bankruptcy order, as a result of the failure of his Insolvency Practitioner to seek the approval of the creditors prior to the bankrupt’s automatic discharge from bankruptcy. In the circumstances, it was appropriate to award modest non-pecuniary damages to (B). These would be discounted, in order to reflect the overall risk that the IVA proposals would not have been accepted. This note has been prepared for general guidance only and should not be used as a substitute to obtaining legal advice. It is recommended that professional advice is sought in relation to specific cases, and practical commercial telephone advice is always available from the MLM Insolvency team. Seminars on insolvency topics of interest can also be provided. Please telephone us for further information. MLM Solicitors ©2005 |
