Auteur

Luke Viner

Collaborateur senior

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Auteur

Luke Viner

Collaborateur senior

Read More

6 juin 2024

Restructuring & Insolvency Update - June 2024 – 4 de 5 Publications

UK director found liable for fraudulent trading and misfeasance for concealing and destroying company records

  • Quick read

Background

Crabb was the sole director of Courtside Recycling Ltd (Courtside). From 2014 to 2018, Crabb instructed Courtside's accountants to file VAT returns but only provided bank statements for one of the Company's three bank accounts. As a result, the VAT assessments significantly understated Courtside's true VAT liabilities for this period.

Following its own investigation and using transaction information gathered from Courtside's other bank accounts, HMRC issued amended VAT assessments. Courtside was unable to pay its VAT liabilities.

HMRC presented a winding up petition and liquidators were appointed to Courtside in 2018. The liquidators pursued Crabb for fraudulent trading and misfeasance. The evidence presented by the liquidators showed that Crabb had destroyed and concealed company records to understate the true financial position of Courtside and defraud HMRC. 

Due to the destruction of company records, Crabb was also unable to rebut the allegations that significant funds had been withdrawn from company accounts for no benefit to Courtside. 

Held

  • Crabb was liable for fraudulent trading and misfeasance and ordered to repay £2.5 million. 
  • There were also smaller transactions made after the commencement of the winding up which were held to be void.

Key takeaways

  • Directors are under strict obligations to maintain accurate company records.
  • Courts may infer that the deliberate concealment and destruction of company records indicate fraudulent conduct by a director.
  • It is not a bar to a claim of fraudulent trading if only one creditor was intended to be defrauded.

Thiel-Czerwinke and another (joint liquidators of Courtside Recycling Ltd) v Crabb [2024] All ER (D) 127

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.

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