First Division, Inner House, Court of Session – allegation of sale at an undervalue. The liquidator appealed a finding that as a speedy sale was required the sale price was proper.
Held: The reclaiming notice was allowed. The sale of the company’s main place of business would not lead to a recovery. A person, once he or she became insolvent, owed a fiduciary duty to have regard to the interests of his or her creditors and as a result, if a debtor alienates property once he or she is insolvent, he or she must obtain full consideration for the property alienated. When an insolvent trading entity’s business was about to come to an end, there was no need to maintain liquidity and the paramount importance of the interests of the creditors prevailed over any need to pay debts as they fall due, and: ‘For these reasons we are of opinion that the need for a forced sale to provide immediate liquidity is not normally a factor that should be taken into account in determining the adequacy of consideration obtained for a sale of the debtor’s assets in any case where the debtor has ceased business or is about to cease business.’
Judges:
Lord President Lord Drummond Young Lord Malcolm
Citations:
[2018] ScotCS CSIH – 7, 2018 GWD 4-69, 2018 SCLR 532, 2018 SC 314, 2018 SLT 205, [2018] BPIR 461
Links:
Statutes:
Jurisdiction:
Scotland
Citing:
Appeal from – Macdonald and Others v Carnbroe Estates Ltd SCS 18-Jan-2017
(Outer House) Allegation of sale at an undervalue – Carnbroe had established that the sale of the Property was made for adequate consideration. Lord Woolman recorded the submission which counsel made on behalf of Carnbroe that Grampian was fighting . .
Cited by:
At inner house – MacDonald and Another v Carnbroe Estates Ltd SC 4-Dec-2019
‘This appeal concerns the Scots law of gratuitous alienations on insolvency. It raises three principal questions. First, there is a question as to the interpretation of the term ‘adequate consideration’ in section 242(4)(b) of the Insolvency Act . .
Lists of cited by and citing cases may be incomplete.
Insolvency
Updated: 09 May 2022; Ref: scu.605898