(Tradition Financial Services Ltd v Bilta (UK) Ltd and others)
The Court of Appeal considered the scope of the words ‘any persons who were knowingly parties to the carrying on of the business in the manner mentioned above’ contained in section 213 of the Insolvency Act 1986 (IA 1986).
IA 1986, s 213 deals with the scenario where any business of the company has been carried on with the intent to defraud creditors of the company or creditors of any other person, or for any fraudulent purpose. If a person is found liable for fraudulent trading the court may, upon an application by a liquidator, declare that the person should contribute to the assets of the company. Tradition Financial Services Ltd (TFS), the appellant, argued that the phrase was restricted to persons exercising management or control over the company in question. The liquidators of the respondent companies contested that argument and submitted that the word ‘party’ had a wider definition.
The court held that a person liable under IA 1986, s 213 may well extend further than just those exercising management or control over a company but whether that could be proved would depend on the facts of each case which would require careful analysis.
This article was first published on Lexis®PSL on 27 March 2023.
Authored by Ben Rutledge, associate at Keidan Harrison LLP.