Insolvency Act 1986 – recent case

In the recent case of Avonwick Holdings Ltd v Castle Investment Fund Ltd, which concerned whether a transaction that could be potentially be set aside under the Insolvency Act 1986 could constitute unlawful means for the purpose of a conspiracy claim, the High Court held that such a claim had a real prospect of success where the alleged unlawful means were acts covered by sections of the Insolvency Act 1986 and that there was no reason to confine the rule to breaches of criminal statutes.

The Insolvency Act provisions (in this case the relevant sections related to transactions at an undervalue, section 238, preferences, section 239, and transactions defrauding creditors, section 423) were intended to provide protection to creditors and so it was therefore appropriate to argue that the acts caught by those provisions were unlawful acts. As a result a conspiracy to commit those unlawful acts was in principle actionable as an unlawful means conspiracy, and this could include procuring breaches of fiduciary duties which in this case related to director`s duties.

For further advice please contact Daljit Singh or David Robins.