Insolvent company – unlawful preference payments and misfeasance

Type: Antecedent transactions and Misfeasance

Sector: Insolvency & Restructuring

Amount: £270,000

The former directors of an insolvent company were being pursued for the repayment of sums for which they had personally received from the company, at a time when the company was insolvent. 

The problem

The payments which the directors were not entitled to receive were paid to them either as salary or dividends, in preference to other creditors of the company. At the date of liquidation, the company owed it’s creditors over c.£180,000, who were left unpaid.

How Escalate helped

The former Directors simply refused to engage other than to tell the liquidators that they would have to issue a claim to recover any money from them. There were no funds in the company to pursue the directors, and no creditor was in a position to fund the litigation, so the liquidators engaged with Escalate. 

Escalate issued the application and pursued the case to a mediation. Eventually we made a recovery for the insolvent estate, which produced a return to its creditors.



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