Welcome to Issue 3 of Insolvency Matters, bringing together our pick of the key legal developments in insolvency and restructuring over the first half of 2025. Notably, the Supreme Court has issued important decisions relating to fraudulent trading, transactions defrauding creditors and directors' fiduciary obligations. At the same time, contested restructuring plans have twice reached the Court of Appeal (in Thames Water and Petrofac). These and other developments are summarised below. We wish all of our readers a safe and enjoyable summer.
Fraudulent Trading
Bilta (UK) Ltd v Tradition Financial Services [2025] UKSC 18: The Supreme Court has confirmed that liability for fraudulent trading under section 213 of the Insolvency Act 1986 (the 1986 Act) can fall on parties outside of the fraudulently trading company. This landmark decision emphasises that any individuals or corporate entities that are "knowingly parties" to the fraudulent trading may be liable for it, not just those involved in the management of the company itself. For more information see our article.
Transactions defrauding creditors
El-Husseiny and another v Invest Bank PSC [2025] UKSC 4: The Supreme Court held that there is nothing in the wording of s.423 of the 1986 Act that limits its application to assets in which the defendant has a direct beneficial interest. Therefore, a transfer of a valuable asset for no consideration by a solvent company wholly owned by an individual could be a "transaction defrauding creditors" by that individual if it was done for the purpose of putting assets beyond the reach of creditors.
Malik v Messalti [2024] EWHC 2713: The High Court held that it is not necessary to show that the defendant had a particular creditor or group of creditors in mind when bringing a claim under s.423 – it is sufficient that the defendant's purpose in entering into the transaction was to put assets beyond the reach of any person who might, at some time, make a claim against him.
Purkiss v Kennedy [2025] EWCA Civ 268: A s.423 claim failed in this case (both in the High Court and the Court of Appeal) because, although the transactions had been at an undervalue, they had not been entered into for the purpose of putting assets beyond the reach of creditors. The tax avoidance scheme at the heart of the claim was designed to prevent a tax liability arising in the first place.
Restructuring Plans
Kington S.A.R.L and others v Thames Water Utilities Holdings Ltd and others [2025] EWCA Civ 475: The Court of Appeal upheld the Thames Water restructuring plan. The court emphasised that because plans can be used and structured in so many different ways and in many different commercial contexts, the courts will continue to adopt a flexible approach. Court guidance applicable in one scenario may not be directly applicable in another. However, the court did give firm clarification that it is not the case that the interests of creditors that will be out of the money in the relevant alternative should be given no weight. The court must decide (on a case-by-case basis) how much weight to give those interests. For more detail, see our article.
Re Petrofac Limited [2025] EWHC 1250 (Ch) / Saipem S.P.A. & Ors v Petrofac Limited & Anor [2025] EWCA Civ 821: The Court of Appeal held that the judge had been correct to decline to take into account the "indirect" benefits to the dissenting creditors of the relevant alternative, but wrong to suggest that they could ever be relevant to the "no worse off" test. This assessment should be limited to the direct rights held by the creditors. With regard to the fairness of the plan, the Court of Appeal held that the plan did not fairly distribute the benefits of the restructuring, and therefore should not be sanctioned.
Re Madagascar Oil Ltd [2025] EWHC 1015: The Plan Company was incorporated in Mauritius, but the court was satisfied that it had jurisdiction because the debt to be restructured under the Plan was governed by English law.
Re Enzen Global Ltd [2025] EWHC 852: In this case, HMRC initially objected to the proposed Plan, but after concessions by the Plan company, HMRC was supportive. The judge welcomed this "increased engagement" by HMRC.
Directors' duties
Rukhadze and others v Recovery Partners GP Ltd [2025] UKSC 10: The Supreme Court confirmed that, as fiduciaries, company directors must account to the company for any profits which they make as a result of their directorship. The only exception to this is where the company has given fully informed consent to allow the director to pursue the opportunity personally and keep any profit(s). This duty extends even after they are no longer a director if the profit relates to an opportunity that came to them in their former role as a director. See our article on this decision.
Winding-up petitions
Re a Company (No CR-2024-BHM-000012) [2024] EWCA Civ 1436: The Court of Appeal held that a winding up petition is only to be regarded as "presented" when the petition has been delivered to court and all of the procedural requirements, including payment of the Official Receiver's deposit, have been fulfilled.
Khan v Miah [2025] EWHC 635: One of two owners of a business sought to wind up the company on the basis that it would be just and equitable to do so. They argued that, as a result of a severe falling out between the two owners/directors, the management of the business was deadlocked. The court declined to make the winding-up order. The judge held that the company was not in fact deadlocked such that it was unable to function, and further that the petitioning shareholder was acting unreasonably in seeking a winding-up order instead of accepting the other shareholder's offer to buy their share of the business.
Administration
Mittal and another v Berthier and others [2024] EWHC 3122: Administrators proposed to file dissolution notices under para.84 of Sch.B1 of the 1986 Act. A group of creditors objected and sought a court order placing one of the companies into liquidation so that further consideration could be given to a possible wrongful trading claim. The court balanced the respective interests of this group of creditors against the general body of creditors and ordered that the company be wound up.
Contract Natural Gas Ltd v ZOG Energy Ltd [2025] EWHC 86 (Ch): The court held that time does not stop running for limitation purposes when a company enters administration (unlike the position in a liquidation). For more detail, see our article.
Company Voluntary Arrangements (CVAs)
Paramount Licensing Inc. v Batty & Another [2024] EWHC 3287: The court ordered the supervisor of a CVA to issue a certificate of termination and petition to wind up the company. The judge was persuaded that there had been a number of breaches of the CVA by the company which had not been remedied within 30 days and accordingly were irremediable. Meanwhile, cross-applications by the company effectively seeking to vary the CVA were rejected: the court held that "just as the court cannot rewrite a contract… the court does not have the power to amend/modify the terms of a CVA."
Bankruptcy
Mobile Communications Co. KSCP v Al Saud [2025] EWHC 85: The court held that the debtor did not have a "place of residence" in England and Wales during the relevant three-year period prior to the petition for the purposes of s.256(2)(b) of the 1986 Act. The court therefore dismissed the bankruptcy petition, holding that to establish bankruptcy jurisdiction under this provision the petitioner must demonstrate that the debtor had a "settled purpose" and a "degree of permanence, some degree of continuity, or some expectation of continuity" in their residence.
Cross-border insolvency
Servis-Terminal LLC v Valeriy Ernestovich Drelle [2025] EWCA Civ 62: An unrecognised foreign judgment cannot be the basis for a bankruptcy petition. Overturning the first instance decision, the Court of Appeal concluded that a foreign judgment has no direct operation within the jurisdiction of England and Wales and hence does not constitute a 'debt' under s.267 of the 1986 Act.
Re Farfetch (in liquidation) [2024] EWHC 3340: The liquidators of a Cayman Islands company applied for orders requiring former directors of the company to provide documents and information and/or submit to oral examination. Having previously recognised the insolvency under the UNCITRAL Model Law, the court held that the same principles as are applied to applications under s.236 of the 1986 Act should apply.
Vesnin v Queeld Ventures Ltd and another [2025] EWHC 104: A Russian bankruptcy trustee applied for recognition at common law. The court held that the bankrupt had submitted to the jurisdiction of the Russian bankruptcy court by participating in the proceedings through legal representation and found no bars to recognition on the grounds of fraud, breach of natural justice or public policy. Accordingly, recognition was granted.
Other news
Insolvency Service conference
The Insolvency Service conference, "Forward Thinking", took place on 8 April 2025. A series of thought-provoking presentations looked in-depth at special administration regimes, directors' duties to creditors, restructuring plans and cryptoassets. Our summary of the key discussion points can be found here. The talks can be viewed here.
New court allocation rules
From 1 April 2025, many types of applications and claims issued in the High Court will be automatically transferred to the Central London County Court (CLCC), including (amongst others):
- Bankruptcy petitions where the debt is £500,000 or less
- Applications for private examinations under sections 236 and 366 of the Insolvency Act 1986
- Applications to extend the term of office of an administrator
- Applications to fix the basis or rate of remuneration of administrators or liquidators
- Claims for the restoration of a company to the register
The listing of such applications may be subject to delays depending on the CLCC's resources.
New IVA protocol
On 1 April 2025 a new protocol for Individual Voluntary Arrangements (IVA) came into effect. Issued by the Insolvency Service, This protocol "facilitates the efficient processing and administration of consumer individual voluntary arrangements (protocol IVAs), recognising the need to balance the rights of an individual to obtain appropriate debt relief alongside the rights of creditors to seek repayment of what is owed to them".
New Practice Statement for Restructuring Plans
In May, the Chancellor of the High Court launched a consultation on a proposed replacement for the Practice Statement on restructurings under Part 26 and 26A of the Insolvency Act 1986. At the beginning of July the revised practice statement was issued by the Chancellor of the High Court. The stated aim for the revised protocol is to account for the past five years of experience with Part 26A Plans, and to improve the efficiency and fairness of the process. It focuses in particular on jurisdiction issues and expanding the obligations on a plan company to notify affected parties in advance of a convening hearing.