Davina Bentley & Helen Mulcahy examine dividend payments to the detriment of creditors
- What occurs in a case where dividends which were authorised by the directors of a company to the parent company set off an intra company debt?
In BTI 2014 LLC v Sequana SA and others; B.A.T. Industries plc v Sequana SA and another [2016] EWHC 1686 (Ch), [2016] All ER (D) 96 (Jul), the court considered dividends which were authorised by the directors of AWA to the parent company Sequana, which set off an intra company debt.
BTI was the assignee of claims from AWA, which challenged the payment of the dividends on the basis of Pt 23 of the Companies Act 2006 (CA 2006), against the four former AWA directors. In a second claim heard jointly with BTI’s claim, BAT alleged that the dividends contravened s 423 Insolvency Act 1986 (IA 1986) so Sequana and AWA should account for the payments.
Factual background
The facts of the case were complex but are summarised as follows: a US entity, AWA, was formed when its predecessor merged with a French paper manufacturer.
