A vendor company was assisted by financial assistance given by a subsidiary.
Held: The use of money by a company to repay its existing indebtedness would not normally fall within the concept of the company giving financial assistance to another person within s 151: ‘such a payment does not alter the financial position, save to the extent that a debt due from the debtor is paid by the debtor, so no financial assistance is given’ However: ‘ if Hick Partners had paid its own debt to Armour Trust, it would have given no financial assistance within s 54, the reason being, as I understand, that such a payment does not alter the financial position, save to the extent that a debt due from the debtor is paid by the debtor, so that no help or assistance is given. There is merely a due discharge of a debt . But Hick Northern paying the Hick Partners debt is a horse of another colour. Hick Northern was not paying off its own debt. It may have been making merely a voluntary payment. Accordingly, the payment may have been financial assistance within s 54. ‘
Mervyn Davies QC HHJ
[1980] 1 WLR 1520, [1980] 3 All ER 833
England and Wales
Citing:
Cited – Gradwell (PTY) v Rostra Printers Ltd 1959
(South Africa) An offer was made of andpound;42,000 for the shares and the loan account that was then outstanding to the parent company less amounts owed to lenders on first mortgages. An analysis showed that andpound;40,258 was owed on the loan . .
Cited by:
Cited – Anglo Petroleum Ltd v TFB (Mortgages) Ltd ChD 24-Feb-2006
The company sought to say that loans of 15 million pounds were void under s151 of the 1985 Act. It was said that the loans infringed the provisions of s151 being unlawful financial assistance.
Held: The loans were valid: ‘if it is lawful for a . .
Lists of cited by and citing cases may be incomplete.
Updated: 07 August 2021; Ref: scu.238727
