Manolete Partners PLC v Freed & Ors (Re Just Recruit Group Ltd - Insolvency Act 1986) [2024] EWHC 2242 (Ch) (30 August 2024)

Manolete Partners PLC v Freed & Ors (Re Just Recruit Group Ltd - Insolvency Act 1986) [2024] EWHC 2242 (Ch) (30 August 2024)

Mr Freed, as controlling mind of JRGL, KPL, and AGL, caused payments to be made when JRGL was insolvent or likely to become insolvent, breaching his duty to creditors. Payments to KPL and AGL were transactions at an undervalue and preferences under IA 1986, with statutory presumptions applying due to connection. Ratification by shareholders does not excuse breach of duty to creditors. Relief under s.1157 CA 2006 not granted as Mr Freed did not act honestly and reasonably. Defendants liable for knowing receipt.

Citation
[2024] EWHC 2242 (Ch)
Parties
Claimant/applicant: Manolete Partners PLC; First Defendant/respondent: Norman Freed; Second Defendant/respondent: Key People Limited; Third Defendant/respondent: Achieva Group Limited; Defendants' Counsel (closing Submissions on Limitation to Shortfall Only): Daniel Lewis
Jurisdiction
England and Wales
Judgment Date
30 August 2024
Procedural Posture
Insolvency Application and Part 7 Claim (consolidated) / Final Judgment After Trial
Outcome
Claims against Mr Freed, KPL, and AGL upheld; equitable compensation ordered.
Legal Topics
Directors' Duties, Transactions at Undervalue, Preferences, Knowing Receipt, Ratification, Relief From Breach of Duty
Insolvency Company Law Directors' Duties Transactions at Undervalue Preferences Knowing Receipt Ratification Relief From Breach of Duty

Case Brief

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Parties

Manolete Partners PLC

Claimant/applicant

Norman Freed

First Defendant/respondent

Key People Limited

Second Defendant/respondent

Achieva Group Limited

Third Defendant/respondent

Daniel Lewis

Defendants' Counsel (closing Submissions on Limitation to Shortfall Only)

Procedural Posture

Insolvency Application and Part 7 Claim (consolidated) / Final Judgment After Trial

Legal Issues

  1. 1 Whether payments made by JRGL to KPL and AGL were in breach of directors' duties
  2. 2 Whether payments constituted transactions at an undervalue under s.238 IA 1986
  3. 3 Whether payments constituted preferences under s.239 IA 1986

Ratio Decidendi

Mr Freed, as controlling mind of JRGL, KPL, and AGL, caused payments to be made when JRGL was insolvent or likely to become insolvent, breaching his duty to creditors. Payments to KPL and AGL were transactions at an undervalue and preferences under IA 1986, with statutory presumptions applying due to connection. Ratification by shareholders does not excuse breach of duty to creditors. Relief under s.1157 CA 2006 not granted as Mr Freed did not act honestly and reasonably. Defendants liable for knowing receipt.

Court Disposition

Claims against Mr Freed, KPL, and AGL upheld; equitable compensation ordered.

Orders

  • Mr Freed to pay equitable compensation for breach of duty.
  • KPL and AGL to restore sums received as transactions at undervalue and preferences.