Jurisdiction(s):
United Kingdom

Jones v Aston: no ‘carrying on business’ where director/funder of non-trading companies; bankruptcy service out refused; set-aside applications stayed (England and Wales)

Published on: 23 December 2024

Published by a LexisNexis Restructuring & Insolvency expert

Legal News

Article summary

Jones v Aston Risk Management Ltd [2024] EWHC 2553 (Ch)

What are the practical implications of this case?

The ruling confirms that a director’s continuing links with non-trading or winding-down companies—such as unpaid loans and the performance of directors’ duties—do not, without more, amount to ‘carrying on business’ for jurisdictional purposes. This is especially pertinent where entities are being wound up. Advisers should scrutinise the substance and quality of any ongoing role, rather than simply noting residual ties.

A clear line must be drawn between acts undertaken as a director/shareholder and conduct that amounts to a separate business.
Directors’ loans, outstanding debts or comparable arrangements are, on their own, inadequate to establish jurisdiction, even where the sums are substantial and the relationship continues for a lengthy period.
Providing guarantees for company liabilities and injecting funding are treated in the same way for jurisdiction: neither, by itself, constitutes operating a distinct business. The judgment extends guarantee case law to the wider sphere of company financing.
When advising on jurisdiction, practitioners should assess the totality of evidence of activity. The court will look past formal labels to the commercial reality, asking whether the conduct reflects genuine trading separate from the individual’s company role...

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