Key Points

  • A company in liquidation will not be stopped, on the basis that it was a party to wrongdoing complained of, from bringing claims against directors and other parties for wrongdoing, where the company can be said to be a victim of the wrongdoing.
  • Section 213 Insolvency Act 1986 (fraudulent trading) has extraterritorial effect.

The Facts

Bilta (UK) Limited (in liquidation) ("Bilta") acting by its liquidators contended that it was a vehicle for carousel (VAT) fraud and was left with VAT liabilities in excess of £38 million. The liquidators brought claims against its two directors and other parties, including Jetivia S.A. (a company incorporated in Switzerland) ("Jetivia") and Jetivia's director who lived in France. The claims were made under section 213 of the Insolvency Act 1986 for fraudulent trading, as well as conspiracy and dishonest assistance. 

The Decision

The Supreme Court agreeing with the decisions in the Courts below held that, as between Bilta and its directors, Bilta was a victim and the defendants should not, therefore, be able to defeat the claims by seeking to attribute to Bilta the unlawful conduct for which the directors are responsible.  The Court also held that Section 213 has extra-territorial effect. 

Comment

The case provides clarity for liquidators (following the differing judgements in the case of Stone & Rolls) seeking to bring claims against directors where such companies were run by director/shareholders who are suspected of wrongdoing.  It also provides useful confirmation of the extraterritorial effect of section 213. 

Jetivia S.A. and others v Bilta (UK) Limited and others [2015] UKSC 23

> For a more detailed analysis of the judgment please see our article