The insolvent companies administrators sought reduction of alienations by the companies before entering into administration. It was said that their banker lenders had been misled as to the values of secured properties, agreeing to their release leading to losses, and their sale.
Held: The appeals failed: ‘The gratuitous nature of the alienations was clearly explained by the Lord Ordinary . . Before the various conveyances, the companies owned five properties. A bargain was in place for the sale of one of those properties, 278 Glasgow Road, for the sum of andpound;2.4m. After the sale was completed, andpound;2.4m was transferred to the bank in reduction of borrowings, and the companies retained the other four properties, valued at andpound;1.525m. Those properties were then conveyed to the appellants. The companies received nothing whatsoever in return. There was no reciprocity between those disposals and the earlier payment made to the bank. The purpose and effect of those transactions was to divert assets away from the companies’ creditors: exactly what section 242 is intended to prevent. That they were gratuitous alienations is plain and obvious.’
Lord Neuberger, President, Lord Sumption, Lord Reed, Lord Carnwath, Lord Hodge
[2016] UKSC 30
Bailii, Bailii Summary
Insolvency Act 1986 242
Scotland
Citing:
Appeal from – Brown and Another (Joint Administrators of Oceancrown Ltd) v Stonegale Ltd SCS 11-Dec-2013
Administrators sought to have set aside transactions made before the companies went into administration.
Held: Rejecting the director’s arguments, the Lord Ordinary said: ‘No one paid anything for 110, 210, 260 Glasgow Road and 64 Roslea . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 18 January 2022; Ref: scu.565828
