''Re Shoe Lace Ltd''
994
Year 994 ( CMXCIV) was a common year starting on Monday (link will display the full calendar) of the Julian calendar.
Events
By place
Byzantine Empire
* September 15 – Battle of the Orontes: Fatimid forces, under Turkish genera ...
1 BCLC 111 is a leading
UK insolvency law case, concerning voidable transactions.
Facts
The liquidator of Shoe Lace Ltd sought a declaration that a debenture given to Sharp Investments Ltd, which owned 80 per cent of Shoe Lace and was part of a group controlled by the alleged
shadow director
A board of directors (commonly referred simply as the board) is an executive committee that jointly supervises the activities of an organization, which can be either a for-profit or a nonprofit organization such as a business, nonprofit organiz ...
Mr Mahtani who lived in
Ratingen
Ratingen ( li, Rotinge) is a town in the district of Mettmann in North Rhine-Westphalia, Germany. It lies in the northwestern part of Berg about 12 km northeast of Düsseldorf.
Administration
With a communal reform of 1975 the independent mu ...
, was invalid under the
Insolvency Act 1986 section 245 because it was created after payments to the company. Shoe Lace had shoe shops in
Lancashire
Lancashire ( , ; abbreviated Lancs) is the name of a historic county, ceremonial county, and non-metropolitan county in North West England. The boundaries of these three areas differ significantly.
The non-metropolitan county of Lancashi ...
and
Yorkshire
Yorkshire ( ; abbreviated Yorks), formally known as the County of York, is a Historic counties of England, historic county in northern England and by far the largest in the United Kingdom. Because of its large area in comparison with other Eng ...
but was hopelessly insolvent by April 1990. It gave a
debenture to Sharp Investments Ltd secured with a
floating charge over the whole undertaking on 24 July. Sharp gave it £300,000 on 3 April, £50,000 in May and £11,500 in July. The
Insolvency Act 1986 section 245(2)(a) states that a floating charge is voidable if the value given for the charge does not come after or ‘at the same time’ as the charge was created. It was questioned what the precise time limit of this was.
Judgment
Hoffmann J held that the debenture was voidable, because no businessman would hold this to have been at the same time.
Ralph Gibson LJ, Nolan LJ and Sir Christopher Slade upheld Hoffmann J that a delay of any substantial length (more than a coffee break) would be fatal to the exception.
See also
*
UK insolvency law
Notes
{{reflist, 2
References
*
United Kingdom insolvency case law
High Court of Justice cases
1994 in United Kingdom case law