UK: England and Wales: dispositions of company property after the commencement of winding-up

The Court of Appeal gave judgment several days ago in Express Electrical Distributors Ltd v Beavis [2016] EWCA Civ 765, [2016] WLR(D) 407, an important decision on the operation of section 127 of the Insolvency Act 1986. Section 127 renders void, except where court permission has been granted, any disposition of company property made after the commencement of the winding-up. With regard to the circumstances in which such permission should be granted, Lord Justice Sales (delivering the only reasoned opinion; Patten LJ and the Chancellor agreeing) stated (para. [56]):

The true position is that, save in exceptional circumstances, a validation order should only be made in relation to dispositions occurring after presentation of winding up petition if there is some special circumstance which shows that the disposition in question will be (in a prospective application case) or has been (in a retrospective application case) for the benefit of the general body of unsecured creditors, such that it is appropriate to disapply the usual pari passu principle."