The court considered the legislative history of attempts to prevent asset stripping. A liability to pay money was incurred by a company (and payment was in fact made by the company) in order to facilitate the purchase of shares in it.
Held: Financial assistance was given in breach of s 151 when the claimant company committed itself to pay accountants’ fees in respect of their services in reporting on a due diligence exercise, which was carried out for the purpose of furthering another company’s acquisition of shares in the claimant’s parent company.
Judges:
Arden LJ Buxton and Ward LJJ
Citations:
[2002] EWCA Civ 1999
Statutes:
Jurisdiction:
England and Wales
Cited by:
Distinguished – MT Realisations Limited (In Liquidation) v Digital Equipment Co Limited CA 10-Apr-2003
The company was insolvent, depending upon loans to it from its parent company. In the liquidation, it was claimed that in a scheme for the acquisition of the shares, the assumption of liability to repay a loan amounted to unlawful financial . .
Lists of cited by and citing cases may be incomplete.
Company
Updated: 08 May 2022; Ref: scu.181069
