Insolvency Team ' Recent Insolvency Case Update

• Published date: 18 October 2021
• Subject Matter: Corporate/Commercial Law, Insolvency/Bankruptcy/Re-structuring, Corporate and Company Law, Insolvency/Bankruptcy
• Law Firm: Gatehouse Chambers
• Author: Ms Amanda Eilledge, Ryan Hocking, Sarah Clarke, James Shaw and Sri Carmichael

These case summaries first appeared in LexisNexis' Insolvency Case Alerter. They represent some of the more interesting insolvency decisions to have been published recently.

This summary covers:

1. PSV 1982 Ltd v Langdon [2021] EWHC 2475 (Ch)
2. Bedzhamov, Re [2021] EWHC 2281 (Ch)
3. Re A Company [2021] EWHC 2289 (Ch)
4. Lakatamia Shipping Company Ltd v Hsin Chi Su &amp Ors [2021] EWHC 1866 (Ch)
5. In the Matter of Paragon Offshore Plc (In Liquidation) (Hammersley v Edwards)

PSV 1982 Ltd v Langdon [2021] EWHC 2475 (Ch)

Facts

D was director of Discovery Yachts Ltd ('DYL') between August 2016 and April 2017. DYL built and supplied yachts to Discovery Yachts Sales Ltd ('DYSL'). Mr France bought a yacht from DYSL in October 2015, which was delivered in January 2017 with alleged defects. By September 2017, D was a director of Discovery Yachts Group Ltd ('DYGL'). In September 2017, DYGL agreed with Mr France to repair the yacht.

DYL entered insolvent liquidation on 12 October 2017, putting D in breach of s 216 of the Insolvency Act 1986 ('IA 1986').

Mr France commenced proceedings against DYGL and DYSL in April 2018. DYGL entered administration in December 2019 shortly before trial. The automatic stay against DYGL was lifted on the first day of trial. Judgment was given on 19 December 2019. The judgment held that DYGL entered a contract with Mr France to repair the yacht in September 2017 and that the contract was breached by DYGL in January 2018.

Mr France then assigned his claims against DYGL to C, who sought to recover the judgment sum from D pursuant to ss 216 and 217 IA 1986.

Preliminary issues included: (1) whether C must prove DYGL's liability in separate proceedings against D; and (2) whether those liabilities were incurred at a time when D was in breach of s 216 IA 1986.

Held

The parties agreed that D would only be personally liable for DYGL's debts and liabilities incurred at a time he was in breach of s 216 IA 1986.

On issue (1), the effect of s 217 IA 1986 is that establishing the company's liability (through proceedings or otherwise) makes a defaulting director automatically responsible. It is not necessary to bring separate proceedings against a defaulting director.

On issue (2), 'liability' in s 217 IA 1986 means an obligation to pay a sum of money. The relevant liability was incurred when the contract was breached, at which time D was in breach of s 216 IA 1986 and therefore personally liable.

Bedzhamov, Re [2021] EWHC 2281 (Ch)

Facts

B was a Russian...