BAT Industries plc v Sequana SA

Subject Matter

COMPANY — Director — Breach of duty — Director’s duty to act in interests of company’s creditors — Circumstances in which duty arising — Companies Act 2006 (c 46), s 172(3)

[2016] EWHC 1686 (Ch); [2017] Bus LR 82; [2017] 1 BCLC 453; [2016] WLR (D) 388, Ch D

[2019] EWCA Civ 112; [2019] Bus LR 2178; [2019] 2 All ER 784; [2019] 2 All ER (Comm) 13; [2019] 1 BCLC 347; [2019] WLR (D) 68; [2019] WLR(D) 68, CA

COMPANY — Powers — Reduction of capital — Directors signing solvency statement and reducing share capital in order to pay dividends — Whether in circumstances directors entitled to sign statement — Whether dividends lawful — Companies Act 2006, s 643

[2016] EWHC 1686 (Ch); [2017] Bus LR 82; [2017] 1 BCLC 453; [2016] WLR (D) 388, Ch D

INSOLVENCY — Adjustment of prior transactions — Transactions at undervalue or preferences — Directors authorising distribution by way of dividend — Company potentially owing claimant substantial indemnity — Whether dividend “transaction” within scope of adjustment provision — Whether paid with purpose of putting assets beyond reach of claimant or prejudicing its interests — Insolvency Act 1986 (c 45), s 423

[2016] EWHC 1686 (Ch); [2017] Bus LR 82; [2017] 1 BCLC 453; [2016] WLR (D) 388, Ch D

COMPANY — Director — Breach of duty — Point at which director’s duty to act in interests of company’s creditors engaged — Whether once engaged creditors’ interests paramount — Companies Act 2006 (c 46), s 172(3)

[2019] EWCA Civ 112; [2019] Bus LR 2178; [2019] 2 All ER 784; [2019] 2 All ER (Comm) 13; [2019] 1 BCLC 347; [2019] WLR (D) 68; [2019] WLR(D) 68, CA

INSOLVENCY — Transaction at undervalue — Application to set aside — Company paying substantial dividend to parent — Whether dividend constituting “gift” or “transaction” for no consideration — Whether paid with intention of putting dividend moneys beyond creditors’ reach — Whether provision against debt avoidance applying — Insolvency Act 1986 (c 45), s 423(1)(2)(3) (as amended by Civil Partnership Act 2004 (c 33), s 261(1), Sch 27, para 121)

[2019] EWCA Civ 112; [2019] Bus LR 2178; [2019] 2 All ER 784; [2019] 2 All ER (Comm) 13; [2019] 1 BCLC 347; [2019] WLR (D) 68; [2019] WLR(D) 68, CA

COMPANY — Director — Breach of duty — Company becoming insolvent after payment of substantial dividend — Company bringing claim against directors for breach of averred duty to act in interests of company’s creditors — Whether duty existing — Point at which duty engaged — Content of duty — Whether duty conflicting with shareholder ratification principle and statutory provisions relating to unlawful trading and preferences — Whether applying to payment of lawful dividend — Companies Act 2006 (c 46), s 172(3)

[2022] UKSC 25; [2024] AC 211; [2022] 3 WLR 709; [2022] Bus LR 920; [2023] 2 All ER 303; [2023] 1 BCLC 1, SC(E)

INSOLVENCY — Adjustment of prior transactions — Transactions at undervalue or preferences — Directors authorising distribution by way of dividend — Company potentially owing claimant substantial indemnity — Whether dividend “transaction” within scope of adjustment provision — Whether paid with purpose of putting assets beyond reach of claimant or prejudicing its interests — Insolvency Act 1986 (c 45), s 423(1)(3)

[2019] EWCA Civ 112; [2019] Bus LR 2178; [2019] 2 All ER 784; [2019] 2 All ER (Comm) 13; [2019] 1 BCLC 347; [2019] WLR (D) 68; [2019] WLR(D) 68, CA

Appellate History

Commentary

UK Supreme Court Blog
Case Preview: BTI 2014 LLC v Sequana SA and others Case comment

Law Society Gazette
Supreme Court rules on creditor duty Case comment

Blackstones Criminal Practice 2025
Company Insolvency Offences - False Declarations of Solvency in Voluntary Liquidations B7.50