Meem SL Limited was an unsuccessful start-up company in the United Kingdom. The board resolved to put the company into administration and sell the business to a company owned by the directors.
The applicant shareholders wished to claim on the company's behalf, alleging the directors conspired to dispose of assets for less than real value. The administrators resolved to auction the claim. The applicants argued the auction would cause them unfair harm. The bidders would be the impecunious first applicant, the only person having sufficient knowledge to bring the claim, and the managing director, who would acquire the claim to quash it.
Regarding unfair harm under the Insolvency Act 1986, the Judge held the harm must be unjustifiable by reference to creditor interests or the administration's objective. The Judge noted claims are difficult to value and auction may be a reasonable mode of sale. Public interest in preventing defendants stifling claims by purchase was a relevant albeit marginal factor.
Because the first applicant potentially lacked funds to pursue the claim, the auction offered immediate certainty of a fixed price, and the second applicant had substantial means to bid competitively, the Judge dismissed the application.
See the decision in - Re Meem SL Limited (In Administration)  EWHC 2688 (Ch)