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The acts of the bank in honouring cheques drawn on a company's overdrawn account constitute (i) loans of the sums in question by the bank to the company and (ii) payment by the bank as agent of the company of the sums loaned as monies of the company to the party in whose favour the cheques are drawn.
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The invalidation of dispositions of a company's assets after the date of presentation of a winding up petition is part of the statutory scheme designed to prevent the directors of a company, when liquidation is imminent, from disposing of the company's assets to the prejudice of its creditors and to
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gave Mr Stock’s company a £200,000 overdraft. Mr Stock gave a personal guarantee for it. Then came a winding up petition, as the account was £500 in credit. But by the time the petition was advertised, the account was overdrawn by £121,875 and £190,000 by the time the petition was granted. The bank
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If the acts of the bank of honouring cheques drawn on a company's overdrawn account constitute payments by the bank (by way of loan to the company) of its own monies to the party in whose favour the cheques are drawn, the transaction is outside
Section 127, for there is no disposition of the
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Since 15 October 2003, known as s. 127(1): "In a winding up by the court any disposition of the company's property and any transfer of shares or alteration in the status of the company's members made after the commencement of the winding up is, unless the court otherwise orders,
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The first act is not a disposition of the company's money and is therefore outside
Section 127; but the second act does constitute a disposition to the payee by the company within Section 127 and is recoverable by the liquidator from the payee.
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noted that "he authorities are in disarray and the state of the law is uncertain, if not confused." He then proceeded to identify "the principles which would be expected to operate in a case where
Section 127 applies":
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The invalidation is limited to dispositions of property: it does not invalidate a company's assumption of liabilities, and it has no impact on the company's use, consumption or exhaustion of its assets.
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Presentation of the winding up petition has no impact on the powers of the directors of the company, the authority of the company's agents or the powers of disposition of the company.
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honoured cheques in favour of third parties, most of which were three companies controlled by Mr Stock. Coutts & Co wanted to enforce the guarantee. Mr Stock argued the
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The retrospective invalidation effected by
Section 127 does not change what happened between the date of the petition and the date of the winding up order
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preserve those assets for the benefit of the general body of creditors.
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372:Phillips v Brewin Dolphin Bell Lawrie Ltd
111:Learn how and when to remove this message
192:case, concerning voidable transactions.
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49:adding citations to reliable sources
543:United Kingdom insolvency case law
411:Arbuthnot Ltd v Havelet Ltd (No 2)
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306:Re Gray’s Inn Construction Co Ltd
332:Hollicourt Ltd v Bank of Ireland
186:[1999] EWHC 191 (Ch)
173:Insolvency, voidable transaction
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553:2000 in United Kingdom case law
36:needs additional citations for
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346:Akers v Samba Financial Group
548:High Court of Justice cases
481:Agip (Africa) Ltd v Jackson
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284:Voidable transaction cases
486:[1990] EWCA Civ 2
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181:Coutts & Co v Stock
126:Coutts & Co v Stock
16:UK insolvency law case
144:High Court of Justice
45:improve this article
398:Insolvency Act 1986
357:Insolvency Act 1986
292:Insolvency Act 1986
241:company's property.
206:Insolvency Act 1986
188:, 1 WLR 906 is a
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43:Please help
38:verification
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322:EWHC Ch 191
161:EWHC Ch 191
537:Categories
496:References
390:2 BCLC 438
220:Lightman J
71:newspapers
476:Millett J
309:1 WLR 711
163:1 WLR 906
158:Citations
250:See also
212:Judgment
168:Keywords
508:par. 18
474:citing
150:Decided
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526:par. 7
517:par. 4
465:void."
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