A tenant company had a propensity for postponing payment of its debts until threatened with litigation. Nourse J felt unable to make an order under section 223(d), and considered, but ultimately did not make an order, on the ‘just and equitable’ ground in section 222(f). The phrase ‘as they fall due’, although not part of the statutory text, was understood to be implicit in section 223(d). Nourse J observation as to section 223(d): ‘Counsel says that if I take into account the contingent and prospective liabilities of the company, it is clearly insolvent in balance sheet terms. So indeed it is if I treat the loans made by the associated companies as loans which are currently repayable. However, what I am required to do is to ‘take into account’ the contingent and prospective liabilities. That cannot mean that I must simply add them up and strike a balance against assets. In regard to prospective liabilities I must principally consider whether, and if so when, they are likely to become present liabilities.’
Judges:
Nourse J
Citations:
[1986] BCLC 261
Statutes:
Companies Act 1948 223(d) 222(f0
Jurisdiction:
England and Wales
Cited by:
Cited – Byblos Bank SAL v Al-Khudhairy CA 1987
The parties disputed the validity of the appointment of a receiver. The ostensible ground for appointment of the receiver was not made out, but the bank relied on a new ground, section 223(d) of the 1948 Act. Nicholls LJ observed: ‘Construing this . .
Cited – BNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .
Lists of cited by and citing cases may be incomplete.
Company, Insolvency
Updated: 11 May 2022; Ref: scu.535117
