Tucked away in dusty corners of the Insolvency Act 2003 are two slightly obscure provisions: sections 251 and 257. Those sections deal with various rights of action vested in the liquidator of an insolvent company, and they provide that any proceeds of an action for either a voidable transaction under Part VIII[i] (s.251) or for either insolvent or fraudulent trading (s.257) are “deemed to be assets of the company”. Everyone other than insolvency geeks will be tempted to gloss over that provision and move on. Those seven little words lead to a multiplicity of consequences not often appreciated.
For those two sections, all claims would be rights of action vested in the liquidator rather than being assets of the company. English case law stretching back 80 years suggested that this had three particular consequences, click here to read more.
Read more about Harneys in the BVI
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