Re Yagerphone Ltd
Money recovered by a liquidator from a creditor who received a fraudulent preference is held for the general body of creditors, not for a debenture holder with a floating charge.
Facts
Yagerphone paid a creditor shortly before going into liquidation, which was held to be a fraudulent preference. The liquidator recovered the money from the creditor. The holder of a debenture secured by a floating charge over all the company's assets claimed the recovered money, arguing that it was covered by its charge.
Legal principle
Bennett J held that the recovered money was not subject to the floating charge, and that it was held by the liquidator for the general body of unsecured creditors. The right to recover a fraudulent preference was a right conferred by statute on the liquidator, for the benefit of the creditors generally, and the money recovered had never been part of the company's property covered by the charge. The principle has been applied to recoveries for wrongful trading and other claims that only a liquidator can bring.
Related cases on company charges, insolvency and disqualification
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- Re Bank of Credit and Commerce International SA (No 8) [1998] AC 214
- BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL plc [2013] UKSC 28, [2013] 1 WLR 1408
- Re Continental Assurance Co of London plc [2007] 2 BCLC 287
- Re Lo-Line Electric Motors Ltd [1988] Ch 477
- Re MC Bacon Ltd [1990] BCLC 324
- Morris v Bank of India [2005] EWCA Civ 693
- Re Panama, New Zealand and Australian Royal Mail Co (1870) LR 5 Ch App 318
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