Re a Company (No 001418 of 1988)
Encyclopedia
Re a Company [1990] BCC 526 is a UK insolvency law
case, on the offence of fraudulent trading
under s.213 of the Insolvency Act 1986
.
, National Insurance
contributions, VAT
and debts to creditors (totalling around £212,618). Nevertheless Mr Barford, the company's director and majority shareholder, paid himself an increasingly high salary in the very years that debts were mounting to creditors.
. He ordered £156,420 be contributed for the debts and liabilities, containing a compensatory element for the debts that were part of the fraudulent trading and a punitive element of £25,000 (following R v. Grantham [1984] QB 675). He held there was "real moral blame" in continuing the company's trading when there was no reason to think that the company could pay its debts as they fell due.
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, on the offence of fraudulent trading
Fraudulent trading
Fraudulent trading is an insolvency law concept, and in particular a UK insolvency law concept. It refers to a company that has carried on business with intent to defraud creditors.-Law:...
under s.213 of 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:...
.
Facts
The company had exceeded its overdraft limit and fallen behind in payments for PAYEPAYE
Pay as you earn or PAYE refers to a system of withholding of income tax from payments to employees. Amounts withheld are treated as advance payments of income tax due. They are refundable to the extent they exceed tax as determined on tax returns. PAYE may also refer to withholding of the...
, National Insurance
National Insurance
National Insurance in the United Kingdom was initially a contributory system of insurance against illness and unemployment, and later also provided retirement pensions and other benefits...
contributions, VAT
Vat
Vat or VAT may refer to:* A type of container such as a barrel, storage tank, or tub, often constructed of welded sheet stainless steel, and used for holding, storing, and processing liquids such as milk, wine, and beer...
and debts to creditors (totalling around £212,618). Nevertheless Mr Barford, the company's director and majority shareholder, paid himself an increasingly high salary in the very years that debts were mounting to creditors.
Judgment
Judge Bromley Q.C. held that Mr Barford was guilty of fraudulent tradingFraudulent trading
Fraudulent trading is an insolvency law concept, and in particular a UK insolvency law concept. It refers to a company that has carried on business with intent to defraud creditors.-Law:...
. He ordered £156,420 be contributed for the debts and liabilities, containing a compensatory element for the debts that were part of the fraudulent trading and a punitive element of £25,000 (following R v. Grantham [1984] QB 675). He held there was "real moral blame" in continuing the company's trading when there was no reason to think that the company could pay its debts as they fell due.
See also
- R v. Grantham [1984] QB 675
- Re Augustus Barnett & Son LtdRe Augustus Barnett & Son LtdRe Augustus Barnett & Son Ltd [1986] BCLC 170 is a UK insolvency law case on the standard of fault required to show that directors have been guilty of fraudulent trading.-Facts:...
[1986] BCLC 170 - Re Sarflax LtdRe Sarflax LtdRe Sarflax Ltd [1979] Ch 592; [1979] 1 All E.R. 529 is a UK insolvency law case concerning voidable preferences and fraudulent trading, now in the Insolvency Act 1986. It concerns the definition of "intention to defraud", which is found in a number of legal provisions.-Facts:Sarflax Ltd was in...
[1979] Ch 592