Jurisdiction(s):
United Kingdom

Fraudulent trading and misfeasance: director hid accounts, destroyed records; absence of records led to £2.5m restoration; s127 IA 1986 claim admitted (England and Wales)

Published on: 15 April 2024

Published by a LexisNexis Restructuring & Insolvency expert

Legal News

Article summary

Thiel-Czerwinke and another (joint liquidators of Courtside Recycling Ltd) v Crabb [2024] EWHC 337 (Ch)

What are the practical implications of this case?

This ruling underlines the uncompromising obligation on directors to maintain trading records, and accepts that discarding or failing to retain them was, on these facts, a constituent part of the director’s fraudulent design. It also clarifies that once office-holders demonstrate that company assets or cash were transferred to a director, the absence of documents showing that the funds or property were applied for the company’s advantage renders the director liable to repay the whole amount to the company. That outcome applies even though the judge did not doubt that Mr Crabb did in fact use some of the cash when making payments for Courtside...

What was the background?

Mr Crabb served as the Company’s sole director; the business dealt in scrap metal. For the trading periods from August 2014 to February 2018, the Company submitted VAT returns declaring sales, net of VAT, totalling £545,772. The VAT due on those sales amounted to just under £85,000...

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