Reported Case On A Successful Application By A Liquidator For Restitution Under Section 127 Of The Insolvency Act 1986 ' Change Of Position Defence Rejected

• Published date: 26 May 2023
• Law Firm: Weightmans
• Author: Mr Oliver Nelson and Shevy Narendra

Liquidator successful following failed retrospective validation order proceedings by respondent - change of position defence rejected

Weightmans has successfully acted for a liquidator of a company seeking a declaration that payments out of a company's bank account are void pursuant to section 127 of the Insolvency Act ("IA") 1986 in circumstances where the respondent had previously applied for a retrospective validation order which was dismissed. The respondent opposed the liquidator's application for a declaration relying on a change of position defence. A hearing was held on 6 December 2022 and DJ Bond handed down judgment on 9 May 2023.

Background

• James Court Limited ("the company") entered compulsory liquidation following a winding up petition presented by the liquidator of Think Accounting Limited on 30 January 2019.
• On 11 February 2019, the winding up petition was served on the company.
• The company made payments totalling '37,000 to Hindsight Contractors Limited ("the respondent") by bank transfer on 12 February 2019 and 13 February 2019.
• The winding up petition was advertised on 25 February 2019.
• A winding up order was made against the company on 9 April 2019. As such, the company paid the respondent between the date of the petition and the winding up order.
• The liquidator of the company was appointed on 9 May 2019.
• The respondent's application for a validation order in respect of these payments was dismissed by HHJ...