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Insolvency Law

Expert guidance on all aspects of corporate and personal insolvency

10 MAY 2011

s.212 IA86 - Brown & Anor v Button & Ors [2011] EWHC 1034 (Ch) (04 May 2011)

His Honour Judge Behrens has handed down his judgment in Brown & Anor v Button & Ors [2011] EWHC 1034 (Ch) (04 May 2011). The case considers s.212 Insolvency Act 1986 (IA86). s.212 notes:

"212.— Summary remedy against delinquent directors, liquidators, etc.
(1) This section applies if in the course of the winding up of a company it appears that a person
who—
(a) is or has been an officer of the company,
(b) has acted as liquidator […] 224 or administrative receiver of the company, or
(c) not being a person falling within paragraph (a) or (b), is or has been concerned, or has taken part, in the promotion, formation or management of the company, has misapplied or retained, or become accountable for, any money or other property of the company, or been guilty of any misfeasance or breach of any fiduciary or other duty in relation to the company.
(2) The reference in subsection (1) to any misfeasance or breach of any fiduciary or other duty in
relation to the company includes, in the case of a person who has acted as liquidator […] 225 of
the company, any misfeasance or breach of any fiduciary or other duty in connection with the
carrying out of his functions as liquidator […] 225 of the company.
(3) The court may, on the application of the official receiver or the liquidator, or of any creditor
or contributory, examine into the conduct of the person falling within subsection (1) and compel
him—
(a) to repay, restore or account for the money or property or any part of it, with interest at
such rate as the court thinks just, or
(b) to contribute such sum to the company's assets by way of compensation in respect of
the misfeasance or breach of fiduciary or other duty as the court thinks just.
(4) The power to make an application under subsection (3) in relation to a person who has acted
as liquidator […] 225 of the company is not exercisable, except with the leave of the court, after
[he]226 has had his release.
(5) The power of a contributory to make an application under subsection (3) is not exercisable
except with the leave of the court, but is exercisable notwithstanding that he will not benefit from
any order the court may make on the application."

After a thorough examination of the facts the learned judge concludes, "In my view therefore the claims against Geoffrey Button and James Button succeed in respect of the moneys actually received by them. The claim against Mrs Button fails. Subject to arithmetic and questions of interest there will be judgment against Geoffrey Button for £57,546.50 (£29,935.88 + £18,211.13 + £9,399.74) and against James Button for £65,375.91 (£28,763.36+ £23,253.05 + £13,359.50)."

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