Avery-Gee v Thompson & Ors

Avery-Gee v Thompson & Ors

The asset sale agreement was a transaction at an undervalue because the company received significantly less than the value of its assets, with substantial payments diverted to Mr Thompson and Mr Frayne. Neither acted in good faith regarding the payments received from EMS, except for the £30,000 paid to Mr Thompson before he had notice of EMS's involvement. Relief is granted to recover payments improperly received.

Parties
Applicant: Stephen L Conn; Applicant: Jonathan E Avery-Gee; Respondent: David Thompson; Respondent: EMS Waste Services Ltd; Respondent: Jesse Frayne
Jurisdiction
England and Wales
Judgment Date
09 January 2018
Procedural Posture
Insolvency Application / Judgment
Outcome
Application granted in part
Legal Topics
Transaction at Undervalue, Director Duties, Creditor Protection, Good Faith, Value Received
Insolvency Company Law Transaction at Undervalue Director Duties Creditor Protection Good Faith Value Received

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Parties

Stephen L Conn

Applicant

Jonathan E Avery-Gee

Applicant

David Thompson

Respondent

EMS Waste Services Ltd

Respondent

Jesse Frayne

Respondent

Procedural Posture

Insolvency Application / Judgment

Legal Issues

  1. 1 Whether the asset sale agreement constituted a transaction at an undervalue under section 238 of the Insolvency Act 1986
  2. 2 Whether payments made to Mr Thompson and Mr Frayne are recoverable by the liquidators
  3. 3 Whether respondents acted in good faith and for value

Ratio Decidendi

The asset sale agreement was a transaction at an undervalue because the company received significantly less than the value of its assets, with substantial payments diverted to Mr Thompson and Mr Frayne. Neither acted in good faith regarding the payments received from EMS, except for the £30,000 paid to Mr Thompson before he had notice of EMS's involvement. Relief is granted to recover payments improperly received.

Court Disposition

Application granted in part

Orders

  • Mr Thompson to pay £44,687.50 to the company or its insolvency office holders, representing five payments made between April and August 2016.
  • Mr Frayne to pay £62,562.50 to the company or its insolvency office holders, representing reimbursement of £30,000 and all seven payments made to Mr Thompson.