Express Electrical Distributors Ltd v Beavis & Ors

Express Electrical Distributors Ltd v Beavis & Ors

A validation order should not be granted for the payment of £30,000 as the appellant failed to demonstrate that the payment was in the interests of the general body of unsecured creditors or that there were special circumstances justifying a departure from the pari passu principle. The payment was not in the ordinary course of business and there was insufficient evidence that it benefited the creditors as a whole.

Parties
Appellant: Express Electrical Distributors Limited; Respondent: Beavis and Ors
Jurisdiction
England and Wales
Judgment Date
19 July 2016
Procedural Posture
Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal
Outcome
Appeal dismissed
Legal Topics
Validation Orders, Section 127 Insolvency Act 1986, Pari Passu Principle, Dispositions After Winding Up Petition
Insolvency Law Company Law Validation Orders Section 127 Insolvency Act 1986 Pari Passu Principle Dispositions After Winding Up Petition

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Parties

Express Electrical Distributors Limited

Appellant

Beavis and Ors

Respondent

Procedural Posture

Civil Appeal / Appeal From High Court (chancery Division) to Court of Appeal

Legal Issues

  1. 1 Whether a validation order should be granted under section 127 of the Insolvency Act 1986 for a payment made by a company after presentation of a winding up petition but before knowledge of the petition by the payee.
  2. 2 Whether the payment was in the ordinary course of business and/or for the benefit of the general body of creditors.

Ratio Decidendi

A validation order should not be granted for the payment of £30,000 as the appellant failed to demonstrate that the payment was in the interests of the general body of unsecured creditors or that there were special circumstances justifying a departure from the pari passu principle. The payment was not in the ordinary course of business and there was insufficient evidence that it benefited the creditors as a whole.

Court Disposition

Appeal dismissed

Orders

  • No validation order is made in respect of the £30,000 payment.
  • The sum to remain with the solicitors for the liquidators pending further proceedings.