Jollands v Gull concerns an application by the liquidators of a company to set aside insolvent transactions. The transactions involved funds from the sale of the company's business being paid, via the company's accountant, to three minority shareholders, which then transferred their shares to the respondent shareholders (or in one case, a respondent shareholder's family trust). The respondents' current accounts were in credit at the time.
The liquidators argued that as the minority shareholdings were transferred to the respondents (in one case, the respondent's family trust), the respondents received the benefit of the payments made by the company as repayment of sums owed to each respondent on their current account.
The Court accepted that the evidence supported a finding that the company was unable to pay its debts at the time of the payments and that the transactions enabled the shareholders to receive more than they would otherwise have received in the liquidation.
Of note is the fact that the Court accepted that even in the case of the respondent whose family trust received the transfer of minority shares, the respondents themselves received the benefit of the transactions. The Court held that the transactions were insolvent transactions and ordered that they be set aside.
See the full judgment here.
