MILNE, LIQUIDATOR OF PREMIER HOUSEWARES (SCOTLAND) LLP AGAINST NAEEM RASHID [2018] ScotCS CSOH_23 (14 March 2018)

MILNE, LIQUIDATOR OF PREMIER HOUSEWARES (SCOTLAND) LLP AGAINST NAEEM RASHID [2018] ScotCS CSOH_23 (14 March 2018)

Although the LLP was balance-sheet insolvent and the respondent had reasonable grounds for believing this, the noter failed to prove that the respondent knew or ought to have concluded there was no reasonable prospect of the LLP avoiding insolvent liquidation. The ongoing support from LTC, the family business context, and the genuine prospect of a demerger meant that, at the time of the withdrawals, insolvent liquidation was not inevitable or reasonably foreseeable. Therefore, the statutory test under section 214A was not fully met and the respondent is not liable to make a contribution.

Citation
[2018] ScotCS CSOH_23
Parties
Noter: Brian William Milne, Liquidator of Premier Housewares (Scotland) LLP; Respondent: Naeem Rashid
Jurisdiction
Scotland
Judgment Date
14 March 2018
Procedural Posture
Petition (note) Under Insolvency Act 1986, S.214 a / Judgment After Proof Before Answer
Outcome
petition refused
Legal Topics
Adjustment of Withdrawals, Liquidator's Powers, Limited Liability Partnerships, Wrongful Trading, Balance Sheet Insolvency, Cash Flow Insolvency
Insolvency Company Law Adjustment of Withdrawals Liquidator's Powers Limited Liability Partnerships Wrongful Trading Balance Sheet Insolvency Cash Flow Insolvency

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Parties

Brian William Milne, Liquidator of Premier Housewares (Scotland) LLP

Noter

Naeem Rashid

Respondent

Procedural Posture

Petition (note) Under Insolvency Act 1986, S.214 a / Judgment After Proof Before Answer

Legal Issues

  1. 1 Whether the respondent, as a member of the LLP, is liable under section 214A of the Insolvency Act 1986 to make a contribution to the LLP's assets for withdrawals made within two years prior to winding up, on the basis that he knew or ought to have known the LLP was unable to pay its debts and that there was no reasonable prospect of avoiding insolvent liquidation.

Ratio Decidendi

Although the LLP was balance-sheet insolvent and the respondent had reasonable grounds for believing this, the noter failed to prove that the respondent knew or ought to have concluded there was no reasonable prospect of the LLP avoiding insolvent liquidation. The ongoing support from LTC, the family business context, and the genuine prospect of a demerger meant that, at the time of the withdrawals, insolvent liquidation was not inevitable or reasonably foreseeable. Therefore, the statutory test under section 214A was not fully met and the respondent is not liable to make a contribution.

Court Disposition

petition refused

Orders

  • Prayer of the Note refused; no order for contribution against the respondent.