Tuesday 22 May 2018

UK: England and Wales: 'the purpose' and transactions defrauding creditors

Judgment was given today by the Court of Appeal in JSC BTA Bank v Ablyazov & Anor [2018] EWCA Civ 1176. The judgment is noteworthy because of what is said about the operation of section 423 ("Transactions defrauding creditors") of the Insolvency Act 1986. Section 423 applies only where a transaction has been entered "for the purpose - (a) of putting assets beyond the reach of a person who is making, or may at some time make, a claim against him, or (b)of otherwise prejudicing the interests of such a person in relation to the claim which he is making or may make" (emphasis added). With regard to "the purpose", Lord Justice Leggatt observed:
I agree with the point made in McPherson's Law of Company Liquidation (4th Edn, 2017), para 11-116, that there is no need to put a potentially confusing gloss on the statutory language. It is sufficient simply to ask whether the transaction was entered into by the debtor for the prohibited purpose. If it was, then the transaction falls within section 423(3), even if it was also entered into for one or more other purposes. The test is no more complicated than that" (para. [14]). 

No comments: