Baillie Marshall Ltd v Avian Communications Ltd 2002 SLT 189
Citation: Baillie Marshall Ltd v Avian Communications Ltd 2002 SLT 189
Rule of thumb: If a company goes into administration/liquidation, can transactions which were done at below market value be clawed back? Yes, any transaction an organisation does which is below the minimum market value can potentially be clawed back by an administrator/liquidator if the organisation goes bust.
Judgment:
The Court held that the liquidator is entitled to claw-back assets that were sold below market value, and that they are also allowed to spend money to try to restore these assets to a decent standard to make them as valuable as possible before they are sold, “It seems to me to be reasonably clear, notwithstanding the apparent width of the language of subsection (5) (in particular ‘or other redress as may be appropriate’) that the purpose of the section as a whole is to enable the liquidator (amongst others) to undo, so far as possible, what was done when the preference was created … and, so far as possible, to restore the asset position of the company, diminished by the transaction which created the preference, for the benefit of the general body of creditors. There would appear to be no doubt that the primary remedies envisaged are reduction and restoration of property, and … that the words ‘or other redress as may be appropriate’ properly fall to be construed as relating to redress of the same character, and do not give the court a general equitable jurisdiction.” (Lord Kingarth at para 22)
Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.