Re Shoe Lace Ltd [1994] 1 BCLC 111 is a leading UK insolvency law

UK insolvency law

United Kingdom insolvency law deals with the insolvency of firms and individuals in the United Kingdom. The important statutes are the Insolvency Act 1986, as amended by the Enterprise Act 2002, as well as the Company Director Disqualification Act 1986 and the Companies Act 2006.Insolvency is a...

 case, concerning voidable transactions.

Facts

The liquidator of Shoe Lace Ltd sought a declaration that a debenture given to Sharp Investments Ltd, which owned 80 per cent of Shoe Lace and was part of a group controlled by the alleged shadow director Mr Mahtani who lived in Ratingen

Ratingen

Ratingen is a town in the district of Mettmann, in North Rhine-Westphalia, Germany, in the northwestern part of Berg - about 12 km northeast of Düsseldorf...

, was invalid under the Insolvency Act 1986

Insolvency Act 1986

The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.-History:...

 section 245 because it was created after payments to the company. Shoe Lace had shoe shops in Lancashire

Lancashire

Lancashire is a non-metropolitan county of historic origin in the North West of England. It takes its name from the city of Lancaster, and is sometimes known as the County of Lancaster. Although Lancaster is still considered to be the county town, Lancashire County Council is based in Preston...

 and Yorkshire

Yorkshire

Yorkshire is a historic county of northern England and the largest in the United Kingdom. Because of its great size in comparison to other English counties, functions have been increasingly undertaken over time by its subdivisions, which have also been subject to periodic reform...

 but was hopelessly insolvent by April 1990. It gave a debenture

Debenture

A debenture is a document that either creates a debt or acknowledges it. In corporate finance, the term is used for a medium- to long-term debt instrument used by large companies to borrow money. In some countries the term is used interchangeably with bond, loan stock or note...

 to Sharp Investments Ltd secured with a floating charge

Floating charge

A floating charge is a security interest over a fund of changing assets of a company or a limited liability partnership , which 'floats' or 'hovers' until conversion into a fixed charge, at which point the charge attaches to specific assets...

 over the whole undertaking on 24 July. Sharp gave it £300,000 on 3 April, £50,000 in May and £11,500 in July. The Insolvency Act 1986

Insolvency Act 1986

The Insolvency Act 1986 is an Act of the Parliament of the United Kingdom that provides the legal platform for all matters relating to personal and corporate insolvency in the UK.-History:...

 section 245(2)(a) states that a floating charge is voidable if the value given for the charge does not come after or ‘at the same time’ as the charge created. It was questioned what the precise time limit of this was.

Judgment

Hoffmann J held that the debenture was voidable, because no businessman would hold this to have been at the same time.
Ralph Gibson LJ, Nolan LJ and Sir Christopher Slade upheld Hoffmann J that a delay of any substantial length (more than a coffee break) would be fatal to the exception.