Liquidators can apply the hindsight principle when assessing whether a company is past the point of no return, reports Simon Duncan
Much has been written about the Court of Appeal’s decision in BNY Corporate Trustee Services Limited v Eurosail UK 2007-3BL PLC [2011] EWCA Civ 227. The decision has been appealed to the Supreme Court and is listed to be heard from 25 February 2013.
Since the decision was handed down, lawyers representing liquidators of failed trading companies have encountered difficulty pursuing antecedent claims against the former directors (delinquent directors). This is because the delinquent directors have used the decision to argue that the impugned transactions were not effected at the “relevant time” as defined in s 240 (2) of the Insolvency Act 1986 (IA 1986).
Section 240 (2) states: “Where a company enters into a transaction at an undervalue or gives a preference at a time mentioned in subs-s (1)(a) or (b), that time is not a relevant time for the purposes of s 238 or 239 unless the company—(a) is at that time unable to pay its debts within the meaning
