Fire Magazine Issue 26 by thoughtleaders4

ISSUE 26 - SEPT 2026

MAGAZINE Fraud • Insolvency • Recovery • Enforcement

Contentious Insolvency Edition: Navigating the Fault Lines of Financial Distress

Thought Leadership for and by the FIRE Community

ThoughtLeaders4 FIRE Magazine • ISSUE 26

INTRODUCTION

“In the middle of every difficulty lies opportunity.”

- Albert Einstein

We are delighted to present Issue 26 of FIRE magazine. In this Contentious Insolvency edition, our contributors explore the key challenges, emerging trends and complex disputes shaping the insolvency and restructuring landscape across multiple jurisdictions. We are grateful to our corporate partners, authors and members for their continued support, expertise and engagement, which help make this community stronger with every issue.

The ThoughtLeaders4 FIRE Team Paul Barford Founder/Managing Director

Chris Leese Founder/Chief Commercial Officer

020 7101 4155 email Paul

020 7101 4151 email Chris

CONTENTS

| F IREside Chat |

Why The World Comes to Cayman Andrew Ayres KC and Thomas Wong on Shifting Focus From London and Hong Kong .....

....................................................................................... Directors Under Fire - When Insolvency Meets Fraud - A Swiss Perspective ....................

APP Fraud - Recovery Against

Financial Institutions ............................................ 12 60 Seconds with... Karen Petch .......................... 16 Your Network Is Your Net Worth -

Danushka De Alwis Founder/Chief Operating Officer

Yelda Ismail Group Marketing Lead

020 7101 4191 email Danushka

020 3398 8551 email Yelda

Amelia Gittins Senior Strategic Partnership Executive

Ben Sullivan Commercial Director

020 3059 9797 email Amelia

020 3965 4386 email Ben

Melody Mok Conference Portfolio Manager

Lily Taylor Marketing Manager

020 3997 8527 email Melody

020 3433 2285 email Lily

The Power of Relationships in Building

a Career in Contentious Insolvency ................... 19 Genuine Belief Is Not Enough Supreme Court Confirms Section 172

CONTRIBUTORS

Andrew Ayres KC - Twenty Essex Thomas Wong - Twenty Essex Natalia Hidalgo - Monfrini Bitton Klein

Ibrahim Aderibigbe - Bloomfield LP Emmanuel Abaniwo - Bloomfield LP

Demands Good Faith in Conduct,

Not Just Thought .................................................. 23 60 Seconds with... Abigail Rushton .................... 26 Asset Tracing and Freezing Orders in Nigerian Insolvency Proceedings Practical Challenges and

Recent Developments .......................................... 28 It’s Time to Look Again at

Limitation in Insolvency Claims .......................... 31 Fowl Play - Lessons from Lux Films Ltd v

Fowler & Anor [2026] EWHC 963 (KB) ................ 35

Edouard Kaiflin - Monfrini Bitton Klein

Mark Hubbard - New Square Chambers

Lucas Moore - Payne Hicks Beach

George Dougenis - New Square Chambers

Its Promise in Cyprus? ........................................ 38

Ben Moore - Charles Russell Speechlys

Brazil - A Good Place to be a Creditor ................ 41

Sophia Iddon - Charles Russell Speechlys

Before Exequatur - What a Foreign

Victor Lui - Payne Hicks Beach Francesca Sargent - Payne Hicks Beach Karen Petch - Twenty Essex Georgina Sundown - ABC Legal Talent

Antonia Argyrou - Argyrou Legal

Claudine Morgan - Charles Russell Speechlys

Geraldo Fonseca - FVA Advogados

Mary Barrett - Charles Russell Speechlys

Elena Fedorova - Fedorova Avocat

Abigail Rushton - Charles Russell Speechlys

Jennifer Fox - Ogier

Adedoyin Afun - Bloomfield LP Michael Abiiba - Bloomfield LP

Eanna O’Connor - Ogier

Has Examinership Delivered on

Insolvency Can and Cannot Do in France -

A French Perspective After Drelle ....................... 44 Privy Council to Consider Whether Liquidation

Preserves Claims from Limitation ...................... 47 2

Fraud. Insolvency. Recovery. Enforcement. The global Asset Recovery community bringing together key practitioners across contentious insolvency, fraud litigation and international enforcement.

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

FIRESIDE CHAT WHY THE WORLD COMES TO CAYMAN

ANDREW AYRES KC AND THOMAS WONG ON SHIFTING FOCUS FROM LONDON AND HONG KONG Authored by: Andrew Ayres KC (Barrister) & Thomas Wong (Barrister) - Twenty Essex Perhaps like you, I have a chancery, commercial and offshore practice, and also sit as arbitrator.

Could You Introduce Yourself? Andrew - I am Andrew Ayres. I have been a Silk since 2015, which seems like only yesterday. I am a member of Twenty Essex in London, and with respect to the Cayman Islands I practise under the umbrella of Johnstone Law, a specialist boutique litigation firm, run by Andrew Johnstone and Rhiannon Zanetic. I am grateful to both of them for having me in their team. Thomas - Thank you. As for me, I am Thomas Wong, a junior barrister at Twenty Essex who practises in England & Wales and Hong Kong. I was first a Hong Kong commercial litigation solicitor from 2010–2017, then switched to the Hong Kong Bar in 2018, and was called to the English Bar in 2021.

Could You First of All Tell Us When and How You First Came Across Cayman Cases? Andrew - I first started doing Cayman advice and litigation in the late 2010s. I had always been told that Cayman was principally a Silks’ market. As is so often the case, long relationships are built from good initial personal impressions and then constantly doing the best and most conscientious job possible – and this is how I started in Cayman litigation, mainly with Ogier.

It was immediately apparent to me that Cayman litigation, in particular Cayman financial litigation, was of a different order of magnitude from that regularly evident in London and elsewhere. Depending on which source you check, Cayman is the fifth largest financial centre in the world, measured by assets held through Cayman legal structures. Given the presence on island of fewer than 1,000 Cayman attorneys, it is no wonder that the Cayman legal profession is so busy, and that has turned out to be just as true for me. Thomas - I entirely agree with you. Although obviously not as experienced as you, I too find that Cayman company, funds and financial cases easily involve 9-figure or even greater claims, usually fought ferociously by multiple parties. In such massive – and usually longrunning – cases, working closely with the team of the instructing Cayman firm (as well as any onshore legal team) becomes extremely important: they work directly with the client, and provide essential factual, legal and strategic input. And, of course, doing the best job possible, being available and enthusiastic about the case, and good impressions, are the way to success!

ThoughtLeaders4 FIRE Magazine • ISSUE 26 been serving those clients for over 15 years (as a native Chinese speaker myself), so they are a familiar territory to me. The bonus is that the Grand Court uses the same set of Rules as the Hong Kong High Court (and I am a contributing editor of the Hong Kong White Book, which is regularly cited in Cayman), allowing me to get stuck in formulating procedural strategies and focusing on the substance of the case from day one!

So, What Made You Decide to Relocate to Cayman And Focus on Financial Services Division (“FSD”) Cases? Andrew - In 2024, I finished a longrunning fraud trial on island, and I concluded that I really could live fulltime in Cayman. I enjoyed the climate, the lifestyle, the people and most of all the work. I was not the only person from my team on that case to do the same: an associate from the onshore law firm decided to move his family to Cayman and join one of the major litigation departments. Clearly, we had independently caught the same bug. Focusing on FSD work was natural to me: I had grown up as a company and insolvency litigator, adding fraud and trusts. This is 100% of the bread and butter of the FSD. It was therefore the most natural fit for me. They say that, as you become more senior, you are in danger of greater specialization, and I didn’t want that. My main reason for being a barrister had always been a love of oral advocacy and I did not want to do the same thing over and over. The FSD is perfect for me because it provides enough variety to keep me fully engaged and enthused, and able to focus on the advocacy. Thomas - All this is extremely interesting to me, not least because, as you are well aware, I am also relocating to Cayman to focus on FSD cases. I also have an upbringing in company, trusts and insolvency law, practising in both Hong Kong and more recently London and offshore jurisdictions including Cayman and the BVI. In particular, I have (as a junior) done a 2-month winding-up and trusts trial on island last year, which, again, involved massive claims (and judgment is still pending!). Aside from that, I also have experience in Cayman funds and company disputes, as well as obtaining injunctive relief. Through my work, I have become fascinated by FSD cases, especially when many of them originate from Hong Kong, China and Asia. I have

How is the FSD, and How are FSD Cases, Different from Their English Counterparts? Andrew - The main type of Cayman structures which hold directly or indirectly worldwide assets are Cayman exempted companies and Cayman exempted limited partnerships. The US hedge fund and investment industry are big users of these structures, and a large proportion of companies listed on the Stock Exchange of Hong Kong are Cayman companies. Cayman companies also appear on the NYSE and the NASDAQ. The number of cases passing annually through the English courts concerning limited partnerships is vanishingly small, at least in comparison with Cayman. English company and insolvency litigation is of course vibrant, but my impression is that there are many more corporate disputes in Cayman relating to shareholder or board control, and alleging shareholder oppression. If you are a company litigation purist, focusing on technical questions relating to corporate constitutions and internal management questions, there is no doubt that Cayman must be amongst the top litigation jurisdictions in the world.

Could You Share with Us Some of The Secrets of a Successful FSD Advocate? Andrew - There are many fewer judges in Cayman than in England, even if one were to focus only on the Business and Property Courts in London. “Know your tribunal” therefore becomes even more important. Also, given that you will be appearing before the same judges time and again, there is a perfect opportunity to learn what they like and don’t like in terms of the presentation, on paper and orally, of applications and trials. There is also an important negative element coming out of appearing before the same judges frequently, which is not to lose their trust as an advocate. Of course, they know that you are always pushing your client’s position, but they must have confidence that you are also assisting them come to the best answer, consistent with the good administration of justice.

What Tips Would You Give to Someone Who Comes on Island for Work for the First Time? Andrew - Spend time getting to know the Caymanian citizens as well as the ex pat community. All the foreign attorneys live and work in Cayman with the permission of the Caymanian people, and so it’s good to get to know the local population. It is also great to find a way to give back to the local community and there are myriad ways to do that.

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

DIRECTORS UNDER FIRE

WHEN INSOLVENCY MEETS FRAUD – A SWISS PERSPECTIVE Authored by: Natalia Hidalgo (Counsel) & Edouard Kaiflin (Counsel) - Monfrini Bitton Klein Bankruptcy is often perceived as the end of a company’s story. For directors, however, it frequently marks the beginning of the most significant legal scrutiny. In Switzerland, the opening of insolvency proceedings may expose directors to a wide range of legal consequences, including civil liability and criminal investigations. While these proceedings are governed by different sets of rules and pursue different objectives, they often arise from the very same decisions taken during the final months before insolvency.

Financial Distress: The Board’s Duty to Act Early Among the many changes introduced by the revision of Swiss company law, adopted by the Swiss Federal Parliament on 19 June 2020 and effective since 1 January 2023, the rules governing directors’ duties in situations of financial distress were strengthened. In particular, the provisions dealing with the monitoring of the company’s liquidity, capital loss and over-indebtedness (Articles 725 et seq. Swiss Code of Obligations – ‘SCO’) were amended. Under the revised Article 725 SCO, the board of directors is now expressly required to monitor the company’s solvency. If there is a risk that the company may become insolvent, it must take appropriate measures to ensure the company’s solvency. Where necessary, the board must implement necessary restructuring measures; if these fall under the general meeting jurisdiction, the board must propose

them to the shareholders for approval. Where appropriate, the board must apply for a composition moratorium. The law expressly requires the board to act promptly. The board’s responsibilities do not end there. The law also imposes specific obligations where the company suffers a capital loss (Article 725a SCO) or becomes over-indebted (Article 725b SCO). In the event of a capital loss, the board must take appropriate measures to remedy the situation and, where necessary, implement or propose additional restructuring measures. Whereas in the event of over-indebtedness, the board must immediately prepare interim financial statements, have them audited and, if over-indebtedness is confirmed, notify the competent court unless one of the statutory exceptions applies. The ratio legis behind the reform is to implement early warning systems to ensure an earlier intervention by the board of directors.

ThoughtLeaders4 FIRE Magazine • ISSUE 26 provide the factual basis not only for civil liability claims but also for criminal complaints against the company’s directors where offences under Articles 163 et seq. SPC are suspected. Articles 163 to 167 SPC are indeed deemed to protect creditors. Consequently, creditors may apply to become private plaintiffs in the context of criminal proceedings initiated in connexion with those offences.

Failing to Act on Time The practical significance of these duties, among many others, lies not only in corporate governance, but also in the potential consequences of failing to comply with them. Once insolvency proceedings are opened, the board’s conduct during the period preceding bankruptcy will often be examined in detail. A failure to properly monitor the company’s financial position or to take timely restructuring measures may expose directors to several forms of liability. Members of the board of directors may incur civil liability under Article 754 SCO. According to this provision, directors and all people involved in the business management or liquidation of the company are personally liable towards the company, its shareholders and its creditors for any losses caused from an intentional or negligent breach of their statutory duties. In practice, liability claims frequently arise where directors fail to comply with their statutory duties under Articles 725 et seq. SCO, in particular by reacting too late to a deteriorating financial situation, delaying appropriate restructuring measures or failing to notify the court where required. Such breaches constitute the foundation of the violation of duty required to establish liability under Article 754 SCO.

Criminal Exposure: Insolvency May Also Trigger Criminal Investigations

For directors, the practical consequence is clear: once a company enters financial distress, the focus should not only be on complying with the corporate law duties set out in Articles 725 et seq. SCO. Decisions taken during the final months preceding bankruptcy may subsequently be scrutinised under both civil and criminal law.

Civil liability is not the only risk faced by directors once insolvency proceedings have been opened. Bankruptcy frequently marks the starting point of criminal investigations into the conduct of the company’s management. Swiss criminal law contains a specific set of offences dealing with bankruptcy and debt enforcement (Articles 163 et seq. of the Swiss Penal Code – ‘SPC’). These provisions are intended to protect creditors against fraudulent or abusive conduct committed before or during insolvency proceedings. Depending on the circumstances, directors may be exposed to criminal liability where, for example, they fraudulently conceal, misrepresent, or dissipate assets to the detriment of creditors (Articles 163 and 164 SPC), where the company’s insolvency has been caused or aggravated through grossly negligent or reckless management (Article 165 SPC), where accounting records have not been properly maintained or preserved (Article 166 SPC), or where certain creditors have been intentionally favoured over others shortly before bankruptcy (Article 167 SPC). Although these offences each have their own constituent elements, they frequently arise in the context of corporate collapses. In practice, the Bankruptcy Office plays a pivotal role for creditors. Through its investigations, it may gain access to accounting records, corporate documents and other evidence that individual creditors would rarely be able to obtain on their own. For this reason, maintaining an active dialogue with the Bankruptcy Office is often crucial. Information gathered during the bankruptcy proceedings may

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

APP FRAUD

RECOVERY AGAINST FINANCIAL INSTITUTIONS Authored by: Lucas Moore (Partner), Victor Lui (Senior Associate) & Francesca Sargent (Associate) - Payne Hicks Beach When does the law hold financial institutions responsible for payments induced by fraudsters? In this article, Lucas Moore (Partner), Victor Lui (Senior Associate) and Francesca Sargent (Associate) examine this question in view of recent case law.

What is “Authorised Push Payment” Fraud? According to the National Crime Agency, fraud is the most prevalent crime in the UK, the majority of which is cyber-enabled.1 An increasingly common tactic involves fraudsters impersonating law enforcement officers or bank staff to pressure individuals into paying them. Where the victim is deceived into authorising their bank (i.e. the “paying bank”) to make such a

payment, this is known as “authorised push payment” (APP) fraud – so-called because, on its face, the payment was authorised by the victim as opposed to criminals directly stealing from the victim’s account. UK Finance reported that there were over 240,000 instances of APP frauds in 2025.2

to identify the account holder and ascertain whether the funds have been transferred onwards (and if so, where); (2) freezing/proprietary injunction to preserve funds for recovery. Such exercises are, however, difficult and expensive in practice; often the culprits have absconded and the defrauded sums have long been dissipated. Alternative potential avenues of redress are the paying bank or recipient bank, whose identities are known and liquidity most likely not in doubt.

Why Go After Financial Institutions? It seems obvious (and just) that a victim should seek to recover their losses from the perpetrators. Legal mechanisms available to support such a claim include: (1) third party disclosure orders (Bankers Trust / Norwich Pharmacal) against the bank which received the payment (i.e. the “recipient bank”)

https://www.nationalcrimeagency.gov.uk/what-we-do/crime-threats/fraud-and-economic-crime

https://www.ukfinance.org.uk/news-and-insight/press-release/fraud-report-2026-press-release

[2023] UKSC 25: https://www.supremecourt.uk/cases/uksc-2022-0075.html

Claims Against the Paying Bank? In the landmark decision Philipp v Barclays Bank UK plc,3 the Supreme Court explained the (commonly called)

ThoughtLeaders4 FIRE Magazine • ISSUE 26 “Quincecare duty” owed by the bank to its customer4 as being not a special rule of law, but simply an application of the general duty to follow the customer’s instructions. Where there are reasonable grounds for the bank to believe that the person giving the payment instruction is attempting to defraud the customer, the bank must first make inquiries to verify that the instruction was actually authorised before executing it. Where the paying bank follows an instruction which is not authorised, it cannot debit the customer’s account. The consequence is that the customer victim can sue: 1. In Debt: as the debit was unauthorised, the amount remained to the credit of the customer at law. The bank has to restore the account to its correct balance; and/or 2. For Damages in Breach of Contract and/or Tort: the bank may be in breach of its contractual mandate and/or have failed to carry out its services with reasonable care and skill.5

Individual vs. Corporate Victims It would be difficult for most individual victims to recover from the paying bank: while they may be mistaken when giving instructions, they nevertheless intended the bank to effect payment. Philipp makes clear that, if there is no independent reliable information to suggest to the bank that the instruction was not authorised, it need not be concerned with the wisdom or purpose of the customer’s payment decision.6 On those facts, Mrs Philipp, who was persuaded by a fraudster to make payments, had confirmed her instructions in person and on the telephone with her bank. That did not give rise to any claim against the bank. In contrast, where the bank customer is a company, it is at law a separate legal entity which necessarily operates through its officers. There is accordingly a real risk that the representatives giving instructions on the company’s behalf to the bank may lack authority (whether actual or apparent).7

Corporate victims could argue that the representative acted dishonestly such that the bank was placed on inquiry. This argument was successful in an earlier decision by the Hong Kong Court of Final Appeal, PT Asuransi Tugu Pratama Indonesia TBK v Citibank NA8 (Lord Sumption NPJ giving the judgment, the reasoning of which was largely consistent with Philipp). In that case, the company victim claimed against the bank for payments made upon dishonest instructions of its two authorised signatories to themselves and other officers. The court found that the operation of the account was unauthorised, the bank was put on inquiry and its inquiries were inadequate. Given the analysis in Philipp that the issue is essentially one of authority based on general principles of agency, the following arguments appear to be available. First, an agent acting contrary to a principal’s interests (even if not extracting gain for themselves) may be sufficient to put the bank on inquiry. Support is found in Philipp, which states that an agent’s authority only includes authority to act honestly in pursuit of the principal’s interests.9 Thus, where an agent was deliberate or reckless (albeit possibly honestly) in giving a payment instruction contrary to their principal’s interests, the bank may be required to make reasonable inquiries before relying on that instruction. Second, the bank does not need to be aware of the precise reason for a lack of authority before it may be liable. It would frequently be the case that, in giving the payment instruction, the employee has failed to comply with internal authorisation procedures of the company that are not known to the bank. However, if there are suspicious circumstances about the transaction apparent to the bank, it should nonetheless have to make reasonable inquiries.

Claims Against the Recipient Bank? Claims against recipient banks have traditionally been difficult to pursue by reason of the absence of contractual or tortious duties towards the victim. 10 Unjust enrichment claims (on the ground that the payment was made under a mistake) were similarly challenging by reason of case law to the effect that a recipient bank was not enriched by the receipt of funds for an account holder (Jeremy D Stone Consultants Ltd v National Westminster Bank plc11) and any enrichment was not at the victim’s expense (Tecnimont Arabia Ltd v National Westminster Bank plc12). However, HHJ Paul Matthews rejected these arguments in his judgment on a reverse summary judgment application in the case of Terna Energy Trading DOO v Revolut Ltd (Payne Hicks Beach LLP acted for the successful respondent).13 In Terna the claimant was fraudulently induced by third parties to make a payment to the defendant “electronic money institution” (EMI) and seeks recovery in unjust enrichment. On “enrichment” the Judge rejected the argument that, where a bank receives a payment, an immediate balancing liability matches it in the form of a debt owed to its customer, such that the bank cannot be enriched. The question of enrichment is inherently tied to the question of whether the defendant (agent) is under any liability to account to its customer (principal) for the payment (i.e. whether the defendant has any defences). Further, the defendant was the legal and beneficial owner of the incoming payment (EMIs are not relevantly different from ordinary banks). The Judge considered that

4 Named after Barclays Bank plc v Quincecare Ltd [1992] 4 All ER 363 5 Philipp, [28], [30], [34]-[35], [96]-[97] 6 Philipp, [3], [30], [100], [109]-[110] 7 C.f. Philipp, [98] 8 [2023] HKCFA 3: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=150358 9 Philipp, [72]-[74]; Tugu, [16] similarly held that a plain lack of benefit for the principal or commercial purpose on the face of the transaction and unusual aspects of the transaction may be sufficient cause for inquiry 10 Royal Bank of Scotland International Ltd v JP SPC 4 [2022] UKPC 18, [94]: https://www.jcpc.uk/cases/docs/jcpc-2020-0044-judgment.pdf 11 [2013] EWHC 208 (Ch), [242]: https://www.bailii.org/ew/cases/EWHC/Ch/2013/208.html 12 [2022] EWHC 1172 (Comm), [139]-[142]: https://www.bailii.org/ew/cases/EWHC/Comm/2022/1172.html 13 [2024] EWHC 1419 (Comm): https://www.bailii.org/ew/cases/EWHC/Comm/2024/1419.html

ThoughtLeaders4 FIRE Magazine • ISSUE 26 Jeremy D Stone was not binding and in any event wrong in principle.14 On “at the claimant’s expense”, the Judge held that this requirement was satisfied whether viewing this as a case of agency or a series of co-ordinated transactions (applying Investment Trust Companies v HMRC15). The transaction intended by the claimant was a transfer of funds from its account with its bank to the defendant. It did not make any difference how many correspondent banks were involved along the way (declining to follow Tecnimont).16 While Terna settled shortly before trial in February 2026, HHJ Paul Matthews’ judgment leaves the door open for victims to claim in unjust enrichment against recipient banks. Further, the approach in Terna was followed (albeit strictly obiter) in D’Aloia v Persons Unknown, Binance Holdings Ltd & Ors.17 That case involved a claim by a victim of a cryptocurrency scam against various defendants including Bitkub, a Thai crypto-exchange. It was argued that the victim’s USD Tether,18 which passed through various cryptoexchanges, had arrived in a digital wallet linked to a fraudster’s (one Ms H) account on Bitkub. While the victim was fundamentally unsuccessful due to a lack of evidence that the crypto in Ms H’s account was either traceable to the victim’s funds or received at the victim’s expense,19 the Judge considered that, in principle, Bitkub was enriched at the point of receipt.20 To establish a defence, Bitkub had to act in good faith when it paid the funds away at Ms H’s instructions. On the facts, the Judge found that Bitkub had actual notice of suspicious activity on the account, including that Ms H’s withdrawals were in breach of her account limits imposed to counter money laundering. In turn, this should have caused Bitkub to suspend her account pending an investigation; thus, had the defences been relevant, Bitkub failed to discharge its burden of proving them.21

14 15 16 17 18 19 20 21 22 23 24 25 26

Novel Claims Regarding Frauds Carried Out Via Companies Moorwand Ltd v Hamblin22 demonstrates a novel, though unsuccessful, attempted recovery of funds where the fraud was perpetrated via a corporate vehicle. In that case, victims of an APP fraud (respondent claimants) had paid funds to a company RND (respondent defendant), which had an account with Moorwand Ltd (an EMI and appellant). The victims had been deceived into making “investments” which were then dissipated upon the instructions given by a fraudster (“X”) to Moorwand. It transpired that a few months earlier, X had incorporated RND and impersonated one “Mr Stanfield” to be RND’s sole shareholder/director (the real Mr Stanfield having been a victim of identity theft); X then opened RND’s account with Moorwand using the real Mr Stanfield’s identity documents without his knowledge. The claimants had obtained permission to bring a derivative claim, on behalf of RND against Moorwand (as RND’s paying institution), on the basis that RND held the credit as constructive trustee for the APP fraud victims. However, the Court of Appeal upheld the trial judge’s dismissal of the claim, based on the factual finding (upon a single joint expert’s report) that Moorwand had not been put on inquiry (in the Philipp sense) that X was acting in fraud of RND when X gave transfer instructions to Moorwand, even though Moorwand might have breached regulatory obligations.23

A Duty of Retrieval? A final point of interest is, upon a fraud being discovered, whether the bank owes any duty to take steps to recover funds which had been transferred away; if that exists, the bank could be found liable for sums that could have been (but were not) recalled promptly. In the case of the paying bank, Philipp held that this proposition was arguable and could not be summarily dismissed.24 However, in the case of recipient banks, it was held in Santander UK Plc v CCP Graduate School Ltd25 that no duty of retrieval exists. The court refused to recognise such a ‘novel’ duty of care in tort, because: (1) there is no relationship of proximity between the victim and the recipient bank; (2) when the time funds were removed, the bank’s only obligation was to obey its customer’s instructions (albeit a fraudster); (3) banks would otherwise be in an impossible position of having to make a speedy adjudication when a third party alleges fraud against one of its customers. Whether the law should impose such a duty is therefore a question for Parliament.26

To seek advice on civil fraud and commercial litigation, please contact Lucas Moore, Victor Lui or Francesca Sargent, or alternatively, telephone on 020 7465 4300.

Terna, [64], [66], [69]-[71] [2017] UKSC 29, [48], [61]: https://www.supremecourt.uk/cases/docs/uksc-2015-0057-judgment.pdf Terna, [85], [88]-[91], [93]-[94] [2024] EWHC 2342 (Ch): https://caselaw.nationalarchives.gov.uk/ewhc/ch/2024/2342 A stablecoin pegged to the USD D’Aloia, [6], [8], [10], [18], [264], [382] D’Aloia, [267] D’Aloia, [306]-[313] (on change of position), [322]-[324], [328] (on ministerial receipt) [2026] EWCA Civ 942: https://caselaw.nationalarchives.gov.uk/ewca/civ/2026/942 Moorwand, [22]-[24], [67]-[68], [85]-[94] Philipp, [115]-[119] [2025] EWHC 667 (KB): https://caselaw.nationalarchives.gov.uk/ewhc/kb/2025/667 Santander v CCP, [45]-[49]

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

60 SECONDS WITH... KAREN PETCH BARRISTER

TWENTY ESSEX

hat is one thing you W know now that you wish you had known earlier in your career? hat relationships and user T friendliness are just as important as technical skill. There are many excellent lawyers. But good people want to work with good people; and being technically strong is only part of the equation. You also need to be easy to work with and well connected.

hat has been your W most memorable moment during your career? I have found it fascinating to watch digital assets evolve as an asset class from a punchline to something mainstream and valuable. I’ve acted in several insolvency and regulatory matters involving digital assets, including regulatory proceedings against Bit Trade (part of the Kraken Group), the Yield App liquidation across the Cayman Islands, BVI and Seychelles, and New York proceedings involving Three Arrows and FTX. Each case has raised issues at the

very edge of our understanding of legal concepts concerning personal property.

here has been your W favourite holiday destination and why? ecently, Marrakech. Earlier R this year I stayed at Jnane Rumi, a country house converted into a hotel by a Dutch art lawyer. Updated Moroccan architecture, great art on the walls, well thought out spaces and beautiful food. A perfect refuge from the exciting chaos of the Medina.

I f you could only eat one takeaway for the rest of your life, what would it be? he dumpling noodle soup T from Chinese Noodle Restaurant in Sydney. If you know, you know.

hat advice would you W give to your younger self? ack your instincts and step B confidently into complex work. No one, no matter how brilliant, understands difficult things immediately. Expertise comes from being willing to chip away at what you don’t yet understand until you master it.

hat would you be W doing if you weren’t in this profession? y dream job (which I have M not taken a single step towards achieving) is to be a fine arts auctioneer at Sotheby’s. I love the stories that come with how art has been made, bought, and traded. I also love the buzz of an auction, and I’m fascinated by how people develop their bidding strategies and views on value.

hat is the one thing W you could not live without? I t’s a three-way tie between my coffee machine, my passport and Adobe Acrobat Pro. 16

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

YOUR NETWORK IS YOUR NET WORTH

THE POWER OF RELATIONSHIPS IN BUILDING A CAREER IN CONTENTIOUS INSOLVENCY Authored by: Georgina Sundown (Senior Consultant) - ABC Legal Talent Contentious insolvency is, by its very nature, a relationship-driven world. Whether pursuing assets following a suspected fraud, challenging transactions at an undervalue, investigating director misconduct, navigating a contested restructuring or tracing assets across multiple jurisdictions, these matters rarely exist neatly within one legal discipline. A single case can bring together insolvency and restructuring lawyers, commercial litigators, barristers, insolvency practitioners, forensic accountants, investigators, litigation funders and offshore counsel – often working across borders, against the clock and with competing stakeholder interests. Success requires technical excellence, certainly. But it also calls for commercial judgement, pragmatism and a strategic, informed approach to maximising asset recovery and creditor returns. And there is another asset that can prove enormously valuable throughout a career in this world: your professional network.

qualified insolvency practitioner you meet at an event today is building their career alongside you. In ten years’ time, your generation will include partners, KCs, senior clerks, managing partners and insolvency practitioners leading businesses and major cases.

Think Transformational, Not Transactional In her book Your Network Is Your Net Worth, Porter Gale describes networking as something that should be “transformational, not transactional.” Traditional ideas about networking can make it sound horribly calculated: identify the most senior or influential person in the room, introduce yourself, deliver your elevator pitch, exchange details and move on to the next potentially useful contact. Aside from being rather exhausting, people can usually tell when they’re being networked at. Instead, approach networking with curiosity. The best conversations rarely begin with a predetermined outcome. And don’t make the mistake of only looking upwards. The trainee solicitor, junior barrister, associate, clerk or newly

Some of the most valuable relationships you build throughout your career may be the ones you build sideways, rather than upwards.

Give Before You Get Another concept Gale advocates is “Give Give Get”: putting more energy into what you can contribute to your relationships than what you can extract from them.

In professional life, that doesn’t have to mean grand gestures. 19

ThoughtLeaders4 FIRE Magazine • ISSUE 26 It might be sending someone an article because it reminded you of a conversation you had. Introducing two people who should know one another. Recommending someone for a speaking opportunity. Sharing a colleague’s article. Inviting a more junior person along to an event. Passing on an opportunity that isn’t right for you. Or simply checking in with someone you haven’t spoken to for a while. The important bit is doing it without keeping score, people remember generosity.

Before Becoming More Visible, Decide What You Want to be Visible For Building a network and building a professional reputation go hand in hand. We hear a lot about the importance of having a “personal brand”, which can make it sound as though we should all be carefully curating ourselves. I prefer to think about it much more simply what do I want people to say about me when you’re not in the room? What do I want to be known for? Think about the work you would love to be doing in three, five or ten years’ time. Perhaps you want to become the person people think of for cross-border asset recovery, cryptocurrency and digital assets or director misfeasance, transactions defrauding creditors or enforcement.

Ask yourself: Who is currently getting that work? Who gets instructed on the significant cases? Who do solicitors call when an urgent application lands? Which barristers are becoming synonymous with particular issues? Who is speaking about developments in restructuring plans or cross-border enforcement? Who gets invited onto the relevant panels? Then look beyond technical ability and ask why. What relationships have they built? Where are they visible? What are they writing about? Which professional communities are they part of? What reputation have they developed amongst solicitors, counsel, IPs, funders and clients?

Once you know what you want to be known for, you can be much more intentional about building the knowledge, relationships and visibility that support it.

Don’t Wait Until You Need Your Network Get Outside Your Bubble Contentious insolvency is particularly well suited to relationship building because of how many different professions and specialisms intersect within it. If your practice involves cross-border asset recovery, the value of knowing a trusted practitioner in the BVI, Cayman or another jurisdiction can become apparent very quickly when assets need to be identified, preserved or recovered. If you’re dealing with allegations of fraud or misfeasance, relationships with forensic accountants, investigators and specialist counsel may provide perspectives outside your own. If you’re advising around a distressed business or contested restructuring, understanding how insolvency practitioners, secured lenders, shareholders and different classes of creditors view the same situation can make you a more commercially rounded adviser. Your network expands the pool of knowledge and perspective you can draw upon. If you’re a solicitor, don’t only build relationships with other solicitors. Get to know barristers, insolvency practitioners, funders, forensic accountants, investigators and offshore advisers. If you’re at the Bar, your relationships with solicitors and clerks are hugely important, but there is also enormous value in understanding and connecting with the wider ecosystem surrounding your practice. A diverse professional network exposes you to different perspectives and ideas. It accelerates learning. This is one of the things communities such as ThoughtLeaders4’s FIRE network do particularly well. Technical knowledge and thought leadership are obviously central, but bringing together professionals working across fraud, insolvency, asset recovery and enforcement – across different professions and jurisdictions – also creates the conditions for genuine relationships to form.

Perhaps the worst time to start building your network is the moment you desperately need one - when you’re looking for a new role, trying to generate instructions, seeking an introduction or looking for someone with expertise in another jurisdiction. Strong relationships need nurturing long before there is an ask. So grab the coffee, send the message, go to the event, congratulate the former colleague on their promotion, check in with the person you haven’t spoken to for six months, introduce two contacts who would benefit from knowing each other. In a market where urgent applications, asset preservation measures and rapidly evolving disputes are commonplace, there may not always be time to undertake an exhaustive search for the perfect adviser, so staying visible, not relentlessly, but consistently is ever more important. It’s also important to remember that your network isn’t just a source of income and business – it can be a place for learning and growing - a space where you find mentors, get introduced to new ideas, advice, perspective and support. Be someone worth staying in touch with You won’t know which conversation at a conference will lead to an instruction three years later. You won’t know which junior colleague will become a future client or which introduction will turn into a collaboration, or which person sitting opposite you on a case will one day recommend you. A strong professional network isn’t built by predicting which people will be useful to you - it’s built over years through the people you learn from, champion, collaborate with, introduce, recommend and occasionally lean on. Build relationships before you know where they might lead - be curious, be generous. Know what you want to be known for and give people opportunities to discover it - and above all, be someone worth staying in touch with.

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

GENUINE BELIEF IS NOT ENOUGH

SUPREME COURT CONFIRMS SECTION 172 DEMANDS GOOD FAITH IN CONDUCT, NOT JUST THOUGHT Authored by: Claudine Morgan (Partner) & Mary Barrett (Associate) - Charles Russell Speechlys The Supreme Court has had the final word in Saxon Woods Investments Limited and others (Respondents) v Francesco Costa (Appellant) [2026] UKSC 21 (Saxon Woods), confirming that a breach of the duty to act in good faith to promote the success of the company (under Section 172 of the Companies Act 2006) is not simply a question of the subjective thought process of that director, but also involves an objective assessment of the director’s conduct.

Section 172 Under Scrutiny The issue of interpretation and application of Section 172 arose when Saxon Woods (& fellow minority shareholders), presented a section

994-996 unfair prejudice petition on the basis that Mr Costa (director and former chairman of Spring Media Investments Limited, the company in which Saxon Woods held its shares (the Company)) had personally been responsible for the Company’s breach of a 2016 Shareholders Agreement to work in ‘good faith’ towards a 2019 exit. Having been authorised by the board to manage the sale of the Company (or its business), in accordance with the agreed exit strategy contained in the 2016 Shareholders Agreement, Mr Costa unilaterally decided that a later sale would achieve a better price. Acting alone, Mr Costa deliberately pursued a slower exit strategy whilst taking steps to ensure that no other director or shareholder had any knowledge of his pursuit. Mr Costa was found to have misled the board by giving the impression he had been complying with the Shareholders Agreement despite giving instructions to the Company’s advisors that were contrary to that strategy. However, his ‘personal’ strategy of delay and concealment was upended when Covid-19 hit and destroyed the prospect of any beneficial exit at a later date.

The High Court found Saxon Woods had suffered unfair prejudice under sections 994–996 of the Companies Act 2006 (by the Company’s breach of the requirement to work in good faith towards a 2019 exit, a breach for which Mr Costa was responsible) but Mr Costa had not breached Section 172 of the Companies Act because he had genuinely believed he was acting in the Company’s best interests. On this basis, the Court declined to make an unconditional order that Mr Costa purchase Saxon Woods’ shares, instead, making a conditional order subject to quantum trial and assessment. The trial judge, relying on Regentcrest plc (in liquidation) v Cohen [2001] 2 BCLC 80 described the duty under Section 172 as a “subjective” assessment of the director’s state of mind, and not requiring any objective assessment from the Court. In this instance, Mr Costa’s state of mind, was described as:

‘they wouldn’t like it now if they knew, but they will thank me in the long run’

ThoughtLeaders4 FIRE Magazine • ISSUE 26 and in that sense, on assessment of ‘thought’ alone he demonstrated a sincere belief he was acting in the best interests of the Company. Mr Costa and Saxon Woods appealed the decision. The Court of Appeal dismissed Mr Costa’s appeal but upheld Saxon Woods’ appeal, finding that Mr Costa was in breach of Section 172 because his deception of the board in the pursuit of his unilateral strategy had been dishonest (applying the objective test from Ivey v Genting Casinos [2017] UKSC 67) and not in good faith. Section 172, it was said, requires a director, in all he does,

“to act in good faith towards the company, in the way he considers would be most likely to promote the success of the company…” and any act of dishonesty had to mean a breach of his fiduciary duty. As a result, the Court of Appeal reversed the High Court’s decision on breach and relief and granted an unconditional buy-out order at the December 2019 valuation. Mr Costa appealed against the Court of Appeal finding, maintaining that he had acted in good faith and in the best interests of the Company (as he saw those interests) and the relief granted was therefore inappropriate. The Supreme Court decision focuses on three assessments; the construction of Section 172 as a statutory duty; consistency with how Section 172 has been applied under common law; and consistency with the purpose of the codified duty of governance. Posing the ‘simple question’: Is a director required by section 172 to act, or merely to think, in good faith?

(d) the impact of the company’s operations on the community and the environment,

members is unlikely to demonstrate the ‘good faith’ conduct required of directors. The takeaway for directors;

(e) the desirability of the company maintaining a reputation for high standards of business conduct, and

•

aintain collective board M governance because the primary responsibility for managing a company rests with the board as a whole (acting by majority);

•

here there is a divergence of W thought process as to what is in the ‘best interests’ of the company, it should be discussed transparently with a view to acting collectively and not by any one individual director acting unilaterally;

•

overnance is by actions not just by G thoughts and whilst good intentions matter, conduct that objectively diverges from or is contrary to those intentions (particularly where there has been concealment of that conduct) will be considered;

•

overt or unauthorised use of C delegated powers is likely to result in a simultaneous breach of Section 171 (acting within the constitution and for proper purposes) and Section 172.

(f) the need to act fairly as between members of the company. The answer: a director is required to act, not merely think, in good faith. In dismissing Mr Costa’s appeal, the Supreme Court held that the good faith requirement in section 172(1) must also require reference to a director’s conduct, with the alternative described as:

“a recipe for chaos and paralysis in corporate governance, and destructive of the collegiality of the board of directors as a whole which all stakeholders in limited companies are entitled to expect.” The Supreme Court did not comment on the Court of Appeal’s second ground for finding a breach of Section 172 (distinct from its finding of dishonesty), namely, that Mr Costa departing from the strategy agreed in the SHA, even if motivated by genuine belief and good faith, itself amounted to a breach. It was not necessary to resolve this issue in circumstances where a breach had already been found on grounds of dishonesty. It therefore remains to be seen whether the Court of Appeal’s decision on this point is later challenged, for now, diverting from an agreed contractual course, is likely to be considered its very own breach.

The case further demonstrates how breach of fiduciary duty findings directly affect remedies available in unfair prejudice petitions, including whether a buy-out order is conditional or unconditional and at what valuation date.

Section 172 provides that: A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to— (a) the likely consequences of any decision in the long term, (b) the interests of the company’s employees, (c) the need to foster the company’s business relationships with suppliers, customers and others,

What Does this Mean for Directors? The Court’s decision has clarified that the requirement for “good faith” under section 172(1) is not limited to a director’s thought process. Conduct matters. The exclusion of or concealment from fellow board

The right results across borders No matter which corner of the world you’re in, we’ll fight to ensure any cross-border dispute can be resolved efficiently and effectively or avoided altogether. We’re driven to achieve a successful outcome for every client – we know what matters.

ThoughtLeaders4 FIRE Magazine • ISSUE 26

60 SECONDS WITH... ABIGAIL RUSHTON SENIOR ASSOCIATE

CHARLES RUSSELL SPEECHLYS

hat motivates you W most about your work?

hat book do you W think everyone should read, and why?

he variety. Everyday in T litigation seems to bring a new challenge.

ny type of cozy A crime…not very high brow but fun.

hat is the biggest W life lesson you have learned? Run your own race.

hat does the perfect W weekend look like?

hat is one work W related goal you would like to achieve in the next five years? Continue working with great mentors and colleagues and helping clients.

Friends, family and a pub garden.

hat has been your W most memorable experience during your career so far? cting for a Defendant A in a long running SFO prosecution. Our client was found not guilty following two trials and a long investigation. It was a great result for our client and his family and I got to work alongside a wonderful team.

hat is something W you think everyone should do at least once in their lives? Go to as many new places as possible.

hat is the best film W of all time? ove Actually (I will L watch it anytime of year not just Christmas).

ow do you deal with H stress in your work life? Stop, have a cup of tea, go for a walk and then breakdown what needs to be done.

ThoughtLeaders4 FIRE Magazine • ISSUE 26

ASSET TRACING AND FREEZING ORDERS IN NIGERIAN INSOLVENCY PROCEEDINGS

PRACTICAL CHALLENGES AND RECENT DEVELOPMENTS

Authored by: Adedoyin Afun (Partner), Michael Abiiba (Partner), Ibrahim Aderibigbe (Executive Associate) & Emmanuel Abaniwo (Associate) - Bloomfield LP

Introduction In contentious insolvency cases, creditors and insolvency practitioners may encounter assets that have been transferred, dissipated, or concealed before the necessary insolvency measures can be introduced. Asset tracing and freezing orders therefore play an important role in identifying and preserving company assets available for rescue or distribution to creditors. The effectiveness of these measures, however, depends on speed, proper evidence, and careful coordination between the insolvency process, interim relief, and, where fraud is suspected, proceeds-of-crime mechanisms.

Nigeria’s Evolving Insolvency and AssetRecovery Framework Nigeria’s corporate insolvency system developed through the Companies Act 1968 and the Companies and Allied Matters Act 1990. The Companies and Allied Matters Act 2020 (as amended) (“CAMA 2020”) substantially improved this system by introducing rescue procedures, such as company voluntary arrangements and administration, and enhancing remedies relating to transactions carried out before insolvency. A separate, though sometimes overlapping, system applies to proceeds of crime. The Economic and Financial Crimes Commission (Establishment) Act 20041, the Proceeds of Crime (Recovery and Management) Act 2022 (“POCA”)2 and the Corrupt Practices and Other Related Offences Act 20003 grant public authorities considerable

See sections 6, 7, 20, 21, 22, 23, 25 and 26 of the Economic and Financial Crimes Commission (Establishment) Act 2004.

See sections 9–12 of the Proceeds of Crime (Recovery and Management) Act 2022.

See sections 37 and 45 of the Corrupt Practices and Other Related Offences Act 2000.

(2019) 9 NWLR (Pt. 1677) 262

See sections 13 and 58 of the Mutual Assistance in Criminal Matters Act 2018.

tracing, preservation and forfeiture powers. These are not the usual private remedies available to creditors or insolvency practitioners but may become relevant where an insolvency indicates possible fraud or unlawful dissipation. Nigeria is also a party to the United Nations Convention Against Corruption 2003, United Nations Convention against Transnational Organised Crime 2000 and African Union Convention on Preventing and Combating Corruption. In the case of LA WARI FURNITURE AND BATHS LTD. v. FEDERAL REPUBLIC OF NIGERIA4, the Supreme Court confirmed the constitutionality of non-conviction-based forfeiture under section 17 of the Advance Fee Fraud and Other Related Offences Act. The Mutual Assistance in Criminal Matters Act 2018 also enables cross-border assistance in relation to forfeiture orders.5

ThoughtLeaders4 FIRE Magazine • ISSUE 26 for no or significantly inadequate consideration. These provisions are particularly significant where tracing shows that an asset is no longer held by the insolvent company: preservation may then need to be combined with restorative relief.

Preserving and Recovering Insolvency Assets • Freezing Injunctions Where there is evidence of a real and immediate risk that a defendant’s assets may be removed or dissipated to frustrate a future judgment, a creditor may apply for a Mareva injunction. Under Nigerian law, proof of an obligation owed is insufficient; the applicant must satisfy the conditions for this special relief, including a valid cause of action, the relevant risk of dissipation, full disclosure of all material facts and an undertaking as to damages. A freezing order may affect third parties, such as banks, holding the respondent’s assets. Crucially, the injunction is protective and not proprietary; it does not give the applicant security or improve its priority in an eventual insolvency. • Orders for Disclosure and Tracing. Freezing orders are of limited benefit where assets cannot first be found. Creditors and insolvency practitioners may therefore seek disclosure from banks and other third parties to identify accounts, transactions and destinations of transferred funds. Investigations may also include searches at the Corporate Affairs Commission (Nigeria’s companies registry), land and other asset registries, beneficial-ownership inquiries and examination of company records. • Clawback of Antecedent Transactions. CAMA 2020 considerably enhanced the range of tools available in insolvency. Sections 658 and 659 address fraudulent preferences and transactions at an undervalue. Where the statutory conditions are met, an administrator or liquidator may challenge transactions that preferentially treated a creditor or transferred value out of the company 6 7

• Administration and Receivership. A creditor may apply for an administration order where the statutory conditions are met. According to CAMA 2020, an administrator’s primary objective is to rescue the company as a going concern; where that is not reasonably practicable, the administrator may seek a better outcome for creditors as a whole than would likely result from an immediate winding-up, with realisation for secured or preferential creditors in accordance with the statutory hierarchy.6 On the other hand, the principal role of a receiver is to take possession of and realise the relevant security on behalf of those for whom the receiver was appointed.7

Practical and CrossBorder Challenges Complex corporate structures, fast electronic transfers, incomplete records, and assets dispersed across jurisdictions often make successful recovery difficult. A practical strategy should therefore begin with early investigation of the company’s assets and beneficial ownership, followed by selection of the insolvency procedure most appropriate to the creditor’s objectives, and prompt pursuit of preservation and disclosure relief where justified.

tracing an asset is not equivalent to recovering it. Where an exchange, custodian, or wallet provider is based overseas, disclosure and freezing relief may require legal action or judicial assistance in another jurisdiction. Speed is especially important because digital assets can be transferred across borders almost instantly. Similar issues arise in cross-border insolvency generally. Nigeria has not adopted the UNCITRAL Model Law on Cross-Border Insolvency. Foreign insolvency practitioners seeking access to Nigerian assets should therefore consider early what recognition, substantive proceedings, or interim relief may be required in Nigeria, rather than assume that a foreign insolvency appointment automatically confers effective control over Nigerian assets.

Conclusion Successful asset recovery in a Nigerian insolvency seldom depends on one remedy. Early investigation may identify assets and suspicious transactions; disclosure orders can reveal how funds have moved; freezing relief can preserve assets pending determination of claims; and CAMA 2020’s avoidance provisions may restore value already transferred from the company. Where fraud is suspected, cooperation with enforcement agencies may provide additional preservation and recovery mechanisms. Creditors and insolvency practitioners should therefore investigate early, preserve assets quickly and select recovery measures with the ultimate enforcement strategy in mind.

Bloomfield LP is the Nigerian member of the International Fraud Group (IFG), a global network of specialist law firms focused on fraud and asset recovery.

Digital assets introduce an additional difficulty. Specialist blockchain analysis can trace transactions, identify wallet movements, and link digital assets to individuals or organisations, but

Section 444 of CAMA 2020. Section 556 of CAMA 2020.

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

IT’S TIME TO LOOK AGAIN

AT LIMITATION IN INSOLVENCY CLAIMS Authored by: Mark Hubbard (Barrister) & George Dougenis (Barrister) - New Square Chambers

This article examines the significant impact of the recent Supreme Court decision THG Plc v Zedra Trust Company (Jersey) Ltd on claims under IA 1986, s.423 (fraudulent dispositions), IA 1986, ss.238-241 (transactions at an undervalue and preferences) and IA 1986, s.214 (wrongful trading). It also asks whether Zedra has changed the law on limitation in misfeasance claims, brought under IA 1986, s.212. The decision in Zedra1 itself was, perhaps unsurprisingly, that no period of limitation applies to unfair prejudice claims. To reach this conclusion, however, the Supreme Court adopted a new and unexpectedly narrow interpretation of Section 8 and Section 9 of the Limitation Act 1980 (LA 1980), which apply to swathes of statute-based claims, including claims under IA 1986.

Limitation In Insolvency Claims: The Old Law LA 1980, s.8 (Section 8) provides that “an action upon a specialty” is subject to a limitation period of 12 years, unless a shorter limitation period is prescribed. A limitation period of 6 years is prescribed by LA 1980, s.9 (Section 9) where a claim is for “any sum recoverable by virtue of an enactment”. Prior to Zedra, all claims brought under a statute had been interpreted as being upon a speciality for the purposes of Section 8. Section 9 was applied if the claim, as brought, was for monetary compensation. So, one or other of these two sections provided the primary limitation period for most statutory claims.

[2026] 2 WLR 479.

[2007] 1 WLR 2404.

[2001] BPIR 144.

[1997] 1 BCLC 589.

IA 1986, s.423 and ss.238-241 empower the court to make “such order as it thinks fit” to reverse the impact of transactions prejudicing a company’s general body of creditors. Under IA 1986, s.214, a director may only be ordered to contribute financially to the company’s assets for causing it to trade on at a loss, when it could not reasonably avoid insolvency. The position on limitation for these insolvency claims had been established by a trio of Court of Appeal decisions: Hill v Spread Trustee Ltd,2 Re Priory Garage Ltd3 and Re Farmizer (Products) Ltd.4 An “action on a specialty” was held to cover any claim based on a “statutory cause of action”, and as including fraudulent disposition claims under IA 1986, s.423, transactions at an undervalue (TUV)

ThoughtLeaders4 FIRE Magazine • ISSUE 26 and preference claims under IA 1986, ss.238-241, as well as wrongful trading claims under IA 1986, s.214. So, the 12 year limitation period under Section 8 applied, unless displaced by the 6 year period under Section 9. Where in substance the claim, as brought, was for the recovery of money, Section 9 was held to apply. This meant some claims under s.423 and ss.238241 were held to be subject to a 6 year limitation period and others to a 12 year period.5 As wrongful trading claims are always money claims, all claims under IA 1986, s.214 were held to be subject to Section 9 and hence to a 6 year limitation period.6

The Supreme Court reversed the Court of Appeal, after subjecting Section 8 and Section 9 to a comprehensive new analysis: • Section 8 only applies to an obligation created by statute, which it was held came within a more narrow meaning of “specialty”. A provision which, by contrast, empowers the court to grant discretionary relief, if a certain state of affairs exists, does not create an enforceable obligation for this purpose.9 •

•

The Decision in Zedra Zedra concerned an application to amend an unfair prejudice claim, to rely on an allegation that the petitioner had been unfairly excluded from a bonus share issue. The respondent resisted the amendment, on the novel basis that the new allegations were time-barred, because a 6 year limitation applied, on the facts of the case.7 The Court of Appeal held that the respondent was right and that Section 9 applied, overturning the long-established understanding (or ‘received wisdom’) that no period of limitation applied in unfair prejudice claims.8

ection 9 only applies if a statute S provides for a solely monetary remedy. It does not apply to any claim where the court was also empowered by the statute to award a non-monetary remedy.10 I f Section 8 or Section 9 did not apply to a claim brought under a statute, there was likely to be no applicable limitation period at all.11 ompanies Act 2006 (CA 2006), C ss.994(1) and 996(1) empower the court to make “such order as it thinks fit for giving relief” in circumstances where there is unfairly prejudicial conduct in the affairs of a company. Section 8 and Section 9 therefore do not apply and, accordingly, no limitation period was applicable to unfair prejudice claims.

Hill (fn 2), [116]-[117]; Priory Garage (fn 3), 30-33.

Re Farmizer (fn 4).

Zedra (fn 1).

Same, [17].

Same, [112]-[116].

Same, [130]-[157].

Same, [161]-[162] & [168].

Re Paramount Airways [1993] Ch 223, 239F-H.

Teixeira v Moaven [2026] EWHC 1215 (Ch), [212]-[222].

Same, [155].

Farmizer (fn 4) was approved in Zedra (fn 1) at [135], [141] and [151].

Impact of Zedra on Insolvency Claims The implications of Zedra for claims under IA 1986 are apparently dramatic and far-reaching: •

he language of IA 1986, s.423 T tracks that of CA 2006, ss.9926, empowering the court to grant discretionary relief, or to decline to give relief,12 if a certain state of affairs exists. Section 8 therefore very probably does not apply. In a recent High Court decision, Master Bowles took this view on the basis of Zedra, though his remarks are obiter.13

•

he same is also true of IA 1986, T ss.238-241 and so it very probably follows that Section 8 does not apply to TUV or preference claims either.

•

s the court may give a range of A remedies under IA 1986, s.423 and under IA 1986, ss.238-241, it also very probably follows that Section 9 does not apply to claims brought under those sections. Both Hill and Priory Garage were expressly doubted in Zedra on this point.14

•

ection 9 will continue to apply to S wrongful trading claims under IA 1986, s.214, which are exclusively monetary in nature.15

•

I f Section 8 and Section 9 do not apply to claims under IA 1986, 423 or IA 1986 ss.238-241, it is probable that no limitation period applies at all.

The same reasoning can be applied to various other insolvency claims, including those brought under IA 1986, ss.213, 246ZA, 246ZB and IA 1986, ss.339-342.

ThoughtLeaders4 FIRE Magazine • ISSUE 26

No Limitation in Misfeasance Claims? Misfeasance claims brought under IA 1986, s.212 have been treated as being in a special category for limitation purposes. That section has been interpreted as purely procedural, so that claims brought under it stand outside Section 8 and Section 9 but are subject to the limitation period applicable to the substantive common law claim that is being brought, via s.212, in each case.16

Section 8 and Section 9 in certain circumstances. It does not, in terms, prescribe a limitation period by analogy for any statutory claim to which those provisions do not apply in any event. The Supreme Court’s analysis in Zedra seems to the authors of this article to reinforce the conclusion that Section 8 and Section 9 do not apply to misfeasance claims but also to imply that, if that is the case, there may be no scope for applying any limitation period.

as memories fade and documents are lost.22 The court may refuse to grant relief where there has been unjustified and prejudicial delay.23 Delay is likely to become an increasingly popular defence against “stale” claims brought post Zedra.

There is still no good reason to delay in bringing any form of insolvency claim.

This result has been justified on the basis that, otherwise, misfeasance claims could be brought where there would be an accrued limitation defence to the “underlying” claim.17 However, when interpreting CA 2006, s.994, the Supreme Court held in Zedra that this was “not a good policy argument” and that, for statutory claims, the question of limitation was to be answered by considering LA 1980 alone.18 As the duties underlying IA 1986, s.423 are not created by that section,19 that, in itself, is not, we suggest a ground to distinguish Zedra in misfeasance claims. An argument that LA 1980, s.36 applies, on the basis that misfeasance claims seek “equitable relief” might seem more fruitful.20 But that section disapplies

Practical Considerations for Insolvency Claims Post Zedra Zedra is binding authority only in respect to unfair prejudice claims. Although Hill and Priory Grange were doubted, they were expressly not overruled. As decisions of the Court of Appeal, in principle Hill and Priory Grange continue to bind lower courts, although this position is unlikely to last very long.21 In many cases there may now be no limit on how far back in time insolvency practitioners’ investigations can extend. However, evidential difficulties remain in overturning historical transactions,

Re Eurocruit Europe Ltd (in liq) [2008] Bus LR 146.

Same

Zedra (fn 1), [168].

Giles v Rhind (No 2) [2008] Ch 191, [16]-[17], [36].

Zedra (fn 1) at [161]-[162].

See e.g. Teixeira (fn 13), [212]-[222].

See e.g., in relation to IA 1986, s.423, Law Society v Southall [2002] BPIR 336.

Zedra (fn 1), [170].

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

FOWL PLAY

LESSONS FROM LUX FILMS LTD V FOWLER & ANOR [2026] EWHC 963 (KB) Authored by: Claudine Morgan (Partner), Ben Moore (Senior Associate) & Sophia Iddon (Trainee Solicitor) - Charles Russell Speechlys The High Court’s decision in Lux Films Ltd v Fowler & Andrew Fowler Media Ltd [2026] EWHC 963 (KB), handed down on 24 April 2026 by Mr Justice Sweeting, is a significant judgment for commercial practitioners. Arising from the breakdown of a small ownermanaged media production company, the case provides valuable lessons in directors’ duties, unlawful means conspiracy and the tactical use of insolvency when competitive exits go wrong.

Lux Films The Claimant, Lux Films Ltd (“Lux”), was a small UK video production company incorporated in 2016, held in equal shares by three directorshareholders including Mr Fowler, who were also its salaried employees. There was no shareholders’ agreement and none of the directors had a written contract of employment. Relations between the directors deteriorated in early 2023 and Mr Fowler expressed his wish to exit. Rather than resign and compete openly, he secretly set about diverting Lux’s clients and business opportunities to his own newly incorporated company, Andrew Fowler Media Ltd (“AFML”). He continued to draw a salary, occupy Lux’s office, and use its IT systems, staff, and confidential information. AFML generated in excess of £450,000 plus VAT in gross revenue between February 2023 and September 2024.

A Bit Naughty In a message to a friend, Mr Fowler described his conduct as “a bit naughty” but suggested it would be “hard to prove” - a candid acknowledgment, in Mr Justice Sweeting’s view, that he knew his conduct was improper. AFML argued, by analogy with the criminal law principle laid down in R v McDonnell [1966] 1 QB 233, that no conspiracy was possible because Mr Fowler and AFML were not independent psychological actors but were, in substance, one and the same person.

ThoughtLeaders4 FIRE Magazine • ISSUE 26 Allowing the claim, the High Court held that, as a matter of civil law, a sole director can indeed conspire with his own self-run company and so be liable for unlawful means conspiracy. In delivering judgment, Mr Justice Sweeting carefully distinguished between criminal and civil conspiracy. The decisive question in any civil claim was whether there was evidence of concerted action between two legal persons, as opposed to two independent psychological actors. Since Mr Fowler had acted unlawfully in his capacity as a director of Lux to divert business opportunities to AFML, and then acted in his capacity as a shareholder of AFML to cause AFML to receive those opportunities, this threshold was met. Mr Justice Sweeting succinctly summarised this principle:

“Equity does not permit a fiduciary to evade liability by interposing a company under his control” [145]. For shareholders and directors, this will assuage concerns, as individuals cannot shelter behind the corporate veil simply by routing their wrongful conduct on exiting their employer company through a corporate vehicle in their control. For Claimant businesses pursuing departing directors, this opens the door to joint and several liability against both the individual and the corporate recipient of diverted work, expanding the pool of assets available to Claimants on enforcement.

Preparatory Steps Defence In tandem, the Court firmly rejected argument that Mr Fowler’s conduct amounted only to permissible “preparatory steps” for future competition. It is settled law that a director contemplating departure may take certain preparatory steps, including the incorporation of a company, lease of premises, or informing of potential investors, provided these do not involve actual competition or misuse of confidential information as against the

company they will exit. The director’s conduct here was deemed to go far beyond this, to wholesale solicitation of Lux’s clients and performance of competing work through AFML. Mr Justice Sweeting reinforced that the preparatory steps defence available to directors has well-defined limits, and that line in the sand may be crossed regardless of whether formal resignation has yet occurred. The Claimant’s confidential information, including client pricing, contact details and operational workflows were protected via liability on two fronts: a successful equitable claim for breach of confidence, and a successful contractual claim for breach of implied duty of fidelity. Even in circumstances as in Lux Films Ltd v Fowler, where there were no express competitive restrictions in place to rein in a departing director’s conduct, companies may draw some comfort from belt and braces protection of commercially sensitive business information.

Conclusions Lux Films Ltd v Fowler is a decision rich in practical guidance for commercial practitioners. The corporate form is no sanctuary for a faithless director: where a fiduciary interposes a vehicle under his control, the court will look through form to substance and impose liability on both the individual and the company. The judgment also serves as a stark reminder that duties owed by directors and employees do not diminish simply because relationships sour; if anything, it is precisely in such circumstances that those duties matter most. For owner-managed businesses, the case underscores the importance of documenting the terms of engagement from the outset: shareholders’ agreements, written contracts of employment, and express restrictive covenants remain the first and best line of defence. Where those protections are absent, however, equity, fiduciary duty, and the tort of conspiracy stand ready to fill the gap. As Mr Fowler discovered, conduct that is “a bit naughty” may prove rather more costly than anticipated.

Tactical Insolvency A Mistaken Assumption Additional lessons may be drawn from the development that arose shortly before trial when AFML entered voluntary liquidation, and Mr Fowler was made bankrupt, without notice to the Claimant and against a backdrop of an unpaid costs order in their favour. It was noted by Mr Justice Sweeting that this might be considered an attempt to secure an automatic stay of proceedings, and the Court emphasised that strategic timing of voluntary insolvency while a Defendant was on the approach to the door of the Court in attempt to secure an automatic stay of proceedings was a “mistaken assumption”. This is a salutary reminder that tactical insolvency will not necessarily derail proceedings as potentially hoped; Claimants facing last-minute insolvency filings should consider whether the circumstances support an argument that the Court should decline a stay and proceed to determine liability.

ThoughtLeaders4 FIRE Magazine • ISSUE 26

HAS EXAMINERSHIP DELIVERED ON ITS PROMISE IN CYPRUS?

Authored by: Antonia Argyrou (Director, Insolvency Practitioner) - Argyrou Legal When Cyprus introduced the examinership regime in 2015, it marked a significant shift in the country’s insolvency landscape. Inspired by the successful Irish model, examinership was intended to promote a “rescue culture” by offering financially distressed - but potentially viable -companies an opportunity to restructure under Court protection rather than proceed directly to liquidation.

questions about whether the framework requires reform or whether market participants simply continue to favour more traditional insolvency remedies.

The underlying philosophy is straightforward. Where a company is, or is likely to become, unable to pay its debts, but has a reasonable prospect of survival as a going concern, the Court may appoint an examiner. During the period of Court protection, creditors are prevented from enforcing their claims while the examiner assesses the company’s affairs and prepares proposals for a compromise or scheme of arrangement.

Over a decade later, however, an important question arises: has examinership achieved its legislative objective? Recent statistics suggest that the answer is, at best, uncertain. While the procedure remains an important feature of the Cyprus Companies Law, Cap. 113, its practical use has been extremely limited and, to date, it has not delivered the corporate rescue outcomes originally envisaged by the legislature. This raises broader

to introduce a genuine corporate rescue mechanism into a legal system that had historically focused on liquidation and receivership.

The Purpose of Examinership Examinership was introduced through the Companies Law, Cap. 113, as part of Cyprus’ wider insolvency reforms in 2015. The procedure was largely modelled on Irish legislation and sought

The procedure reflects a broader international policy objective: preserving economically viable businesses, protecting employment and maximising value for creditors where liquidation would produce poorer outcomes.

ThoughtLeaders4 FIRE Magazine • ISSUE 26 appointment itself or the proposed restructuring process. These disputes frequently consume valuable time during the statutory protection period. The practical consequence is that litigation over the application may outlast the period intended to facilitate restructuring, leaving little opportunity for an examiner to perform the very task for which the procedure was designed.

A Procedure with Limited Practical Success Despite these ambitious objectives, examinership has struggled to establish itself as an effective restructuring tool in Cyprus since, despite the numerous applications filed with the Cyprus Courts, none has resulted in the successful appointment of an examiner. This statistic is particularly striking when compared with the continued use of liquidation, receivership and other insolvency procedures. It suggests that, although examinership exists in theory, it has not become part of everyday restructuring practice. For a mechanism specifically designed to facilitate corporate rescue, the absence of successful appointments raises legitimate questions regarding its effectiveness. More particularly, several factors appear to explain the limited success of the regime, such as procedural complexity and creditor opposition. Indicatively, an application for examinership requires substantial preparation before reaching Court, including the preparation of an independent expert’s report addressing the company’s financial position and prospects of survival. Although these safeguards are understandable, they increase both the cost and complexity of commencing proceedings, particularly for companies already experiencing financial distress. Nevertheless, the most significant practical obstacle has been extensive creditor opposition. It is evident that many examinership applications become heavily contested, with creditors, receivers or other stakeholders challenging either the

As Cyprus continues to modernise its insolvency framework, the future of examinership is likely to remain an important area for policymakers, insolvency practitioners and the business community alike. Whether the procedure is reformed, expanded or ultimately replaced, one point is increasingly difficult to ignore: a corporate rescue mechanism can only achieve its purpose if it works effectively in practice.

Looking Ahead The limited practical success of examinership should not necessarily be interpreted as evidence that the concept itself is flawed. Rather, it may indicate that the current procedural framework is insufficiently flexible to achieve its intended purpose. First, procedural delays could be reduced through more specialised judicial management of restructuring applications. Secondly, greater clarity regarding the threshold for demonstrating a

“reasonable prospect of survival” may provide increased certainty for applicants and creditors alike. Corporate rescue remains an important component of any modern insolvency system. Liquidation will always have an essential role where businesses are no longer viable; however, insolvency law should also provide an effective mechanism for rescuing companies capable of recovery. Examinership was introduced to fulfil precisely that function. Yet, eleven years after its introduction in Cyprus, the available evidence suggests that the procedure has not achieved the practical impact originally anticipated. This does not necessarily mean that examinership has failed permanently. It may instead indicate that the regime has reached a point where legislative refinement, procedural simplification and greater judicial experience are required if it is to become a genuinely effective restructuring tool.

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

BRAZIL

A GOOD PLACE TO BE A CREDITOR Authored by: Geraldo Fonseca (Founding Partner) - FVA Advogados Not long ago, no one could say that Brazilian courts were efficient at getting creditors paid. They had a reputation, largely deserved, for granting judgments that no one could collect. Enforcement proceedings piled up, debtors moved assets faster than the file moved, and most claims quietly died somewhere between judgment and payment.1 Something had to change. A procedural framework focused on enforcement, rather than mere adjudication, combined with electronic tools that allow courts to search for and freeze assets nationwide from the bench in seconds rather than months, has considerably narrowed the gap between being a creditor and actually getting paid.

funds as they come in, day after day, and Brazilian courts have allowed successive renewals until the debt is fully satisfied.2 Practitioners nicknamed it the “teimosinha”, the stubborn one.

Finding and Freezing, in a Single Move A single judicial order, issued without prior notice to the debtor, reaches every financial institution in the country simultaneously and freezes the debtor’s accounts up to the amount claimed. It need not be a snapshot: the order can be set to repeat automatically, capturing

The consequence is worth stating plainly. A debtor who empties an account before the order lands has not escaped it. He has only chosen the day he starts losing money. Certain funds, including monthly salary and a small reserve, remain beyond its reach, but it remains a highly effective instrument for a creditor. Locating assets works on the same logic. The creditor does not apply against the debtor; the court queries the databases directly. This reaches registered vehicles, tax filings, and real estate records without the debtor’s cooperation and without the compliance risk that makes disclosure orders so expensive to enforce elsewhere.

1 According to the National Council of Justice (CNJ), the Brazilian Judiciary ended 2025 with 75.5 million pending cases, over 10 million fewer than in 2020. The year brought a record 40.9 million new claims, but also a record 45 million cases disposed of, giving a clearance rate of 110.4%, which the CNJ compares with an average of 100.9% for the European jurisdictions monitored by the Council of Europe’s European Commission for the Efficiency of Justice (CEPEJ). The performance of enforcement proceedings is one of the main drivers of these results. Justiça em Números 2026 (2025 data), available at: https://www.cnj.jus.br/wp-content/uploads/2026/06/relatorio-justica-em-numeros2026-1.pdf. 2 The system allows automatic renewal for up to 30 days at a time, and the judge fixes the period. Brazilian courts have authorised successive renewals until the debt is fully satisfied. The first decision granting an open ended teimosinha was obtained by FVA Advogados before the São Paulo Court of Appeal, case no. 2202768-46.2021.8.26.0000.

ThoughtLeaders4 FIRE Magazine • ISSUE 26 Much of that information is available before proceedings begin. Property, vehicle and companies’ share records are, in substance, public. A creditor can form a view on whether a debtor is worth pursuing, and to what extent, before committing to enforcement costs. Bank balances are the exception: banking secrecy protects financial data, and it becomes visible only through a court order once enforcement is underway.

veil-piercing incident, or proof of fraud, abuse, or commingling of assets. Where that evidence is not yet available, coercive measures against the debtor himself are often the faster path.

The Business Debtor: Bankruptcy as Leverage Where the debtor is a company rather than a person, Brazilian law offers something with no real equivalent in common law systems.

When the Debtor Has Nothing, on Paper Some debtors have no traceable assets yet visibly maintain a standard of living the file does not explain. Brazilian law gives the judge a general power to adopt whatever measures are necessary to secure compliance with a payment order, beyond the standard catalogue of attachment and seizure. The provision is open ended by design, without a menu to choose from, which rewards the more creative creditors’ lawyers. The measure must be devised for the particular debtor, targeting whatever the person or company values most and stands to lose, and argued as proportionate. In practice, this has produced orders suspending driving licences, withholding passports, blocking credit cards, and, in exceptional cases, limiting free transit. The courts have set conditions: ordinary avenues must be exhausted first, the measure must be proportionate, and there must be evidence that the debtor is concealing assets rather than simply lacking them. This remains the most contested area of Brazilian enforcement practice, and the case law is not settled. Brazil has no direct equivalent to the English “Chabra relief”, which extends a freezing order to a third-party holding assets beneficially owned by the debtor. Assets in the hands of others can still be reached, but by a heavier route: a 3

A creditor holding an unpaid instrument above the statutory minimum3, duly protested, may file for the debtor’s bankruptcy on the ground of non payment alone. There is no need to prove balance sheet insolvency: failure to pay a liquid, certain, and enforceable obligation is itself the ground. What follows is the interesting part. The company is served and has 10 days to respond. It may contest the debt, but it may also deposit the full amount in court, which defeats the petition outright. The deposit is elisive: it removes the ground for bankruptcy and converts the proceeding into a dispute over the money, with the money already secured. The strategy is powerful, since a solvent company facing a bankruptcy petition is already under pressure: banking relationships, credit lines, counterparties and, in some sectors, licences all react to the filing long before any court rules on it. Most solvent debtors pay immediately.

But When Can I Enforce in Brazil? Brazilian courts have jurisdiction where the debtor is domiciled here or holds assets here, regardless of where the underlying instrument was issued. If the enforceable instrument is a foreign judgment, it must first be recognised by the Superior Court of Justice before any of these tools become available. The proceeding may take a few months, but interim measures are available in the meantime. Many private contracts qualify as enforceable instruments, allowing enforcement to begin without a prior trial. Depending on the defaulted agreement, litigation might be unnecessary. None of this makes Brazil an easy jurisdiction. Delays are real, case law evolves, and recognition of a foreign judgment remains a step with its own timetable. But the assumption that a Brazilian debt is a Brazilian problem, best written off from a distance, has become expensive. The tools are here, they are fast, and they reach the debtor where it hurts. For the foreign creditor, the question is no longer whether to enforce in Brazil, but how early to start.

That effect is precisely why the mechanism attracts criticism. Brazilian courts and commentators have long resisted using bankruptcy petitions as a substitute for ordinary debt collection, and a creditor whose claim is genuinely disputed, or who is plainly using the petition as pressure rather than as a bankruptcy request, risks having it dismissed and may face liability for the damage caused. The instrument is powerful because it is serious. It must be used properly, and it works when the creditor is prepared to see it through.

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ThoughtLeaders4 FIRE Magazine • ISSUE 26

BEFORE EXEQUATUR

WHAT A FOREIGN INSOLVENCY CAN AND CANNOT DO IN FRANCE A FRENCH PERSPECTIVE AFTER DRELLE1 Authored by: Elena Fedorova (Founder) - Fedorova Avocat

Drelle asked whether an unrecognized foreign judgement can found a bankruptcy petition. The French answer has been “yes” for a long time, and for a different reason. The more valuable question is the wider one: what can be done in France before exequatur – and what a foreign liquidator risks by waiting.

Introduction In Drelle v Servis-Terminal LLC [2026] UKSC 29 dated 27 July 2026 the UK Supreme Court held that an unrecognised and unregistrable foreign judgment gives rise to a “debt” within section 267 of the Insolvency Act 1986, reversing the Court of Appeal ([2025] EWCA Civ 62). It is worth noting that the appeal succeeded on that point alone; the remaining grounds were remitted (paras 95 to 97), so the bankruptcy order has not yet been restored.1 The Court restored the obligation principle on the authority of Blackburn J in Godard v Gray (1870), who justified the English position by contrast with the continent: “Several of the continental nations (including France) do not enforce the judgments of other countries, unless where there are reciprocal treaties to that effect” (para 43). Since, French law has moved on, and in Russian cases specifically: upholding exequatur of two Moscow judgments, the Cour de cassation 1

recited the absence of any convention between France and the Russian Federation and granted exequatur based on common applicable principles, on three conditions only (Bensadon v Gazprombank, Civ. 1re, 30 January 2013, N°. 11-10.588; exequatur conditions from Cornelissen, Civ. 1re, 20 February 2007, N°. 05-14.082). However, the comparative footnote is not sufficient. Foreign counsel with a CIS or offshore insolvency and assets in France face a more practical question, and French law answers it in four stages.

Opening a French Proceeding: No Title Required To take a mirror example to Drelle case, in France a creditor may petition for reorganisation (redressement) or judicial liquidation (liquidation judiciaire) under Articles L. 631-5 and L. 640-5 of the Commercial Code. The petition must contain “any evidence that establishes the cessation of payments” (Art. R. 631-2). No prior enforceable title is needed. The Cour de cassation has held, as a matter of principle, that “it is not necessary that the claims relied upon should have been the subject of an enforceable title, and only uncertain debts may be excluded from the current liabilities (passif exigible), such as a disputed claim whose final outcome depends on proceedings pending before a court of first instance or resulting from a decision open to appeal” (Com., 22 November 2023, no. 22-19.768).

Elena Fedorova, founder Fedorova Avocat, Paris & Nice, French & Russian qualified lawyer : www.fedorova-avocat.com; ef@fedorova-avocat.com

ThoughtLeaders4 FIRE Magazine • ISSUE 26 Two consequences follow. Exequatur is not a precondition of the petition: a domestic or foreign judgment operates as evidence, not as a title. But it must be final — one still open to appeal falls within the excluded category. In Drelle the Russian judgment had exhausted three levels of appeal by February 2020; the same claim, mid-appeal, would not have supported a French petition. The real burden is cessation of payments, which the creditor must prove. In practice an unsuccessful enforcement attempt is the clearest evidence available, which is where exequatur re-enters. (Com., 22 November 2023, N° 22-19.768).

The Race: Individual Creditors Can Outrun a Foreign Insolvency This is the exposure foreign insolvency practitioners most often overlook. Under Article 509 of the French civil procedure code, a foreign insolvency judgment produces no effect in France before exequatur: it does not divest the debtor, and it does not stay individual proceedings. The line is constant. In Kléber the Cour de cassation held, quashing an award of damages against a French creditor who had pursued individual enforcement, that “before the exequatur decision on the foreign bankruptcy judgment, the debtor company was not divested of its assets situated in France and the French creditors retained the right to exercise individual proceedings against those assets” (Civ. 1re, 25 February 1986, No. 84-14.208, Bull. civ. I, No. 38). The principle has been confirmed since, most clearly in a decision holding that absent exequatur a foreign judicial decision produces no stay of individual proceedings in France (Civ. 1re, 28 March 2012, No. 11-10.639, Bull. civ. I, No. 74; see also Civ. 1re, 24 March 1998, No. 96-10.171, Bull. civ. I, No. 122). So an individual creditor holding its own judgment may obtain exequatur of that judgment and enforce against French assets while the collective proceeding remains unrecognised. Every month the liquidator delays is a month in which

the French estate can be dismantled lawfully, by a creditor who has already proved abroad. Exequatur of the insolvency judgment is not a formality to attend to in due course. It is a race.

What the Liquidator Can Do Before Exequatur Not nothing. In a case concerning a Danish liquidation, the Cour de cassation accepted in terms that a foreign judgment opening a liquidation and appointing the organs of the procedure, while producing no divesting effect in France absent exequatur,

“may confer on the latter standing to act in France in the name of the debtor company” (Civ. 1re, 6 July 2016, No. 15-15.850). That opens substantive proceedings: a liquidator with standing may bring a fraud action (action paulienne) under Article 1341-2 of the Civil code to recover assets transferred in fraud of creditors, and may pursue other claims belonging to the debtor. Conservatory measures are available on the same basis. Kléber confines the exequatur requirement to enforcement measures (mesures d’exécution), and French law treats conservatory measures as a distinct category from enforcement measures. A liquidator with standing may therefore secure assets in France pending recognition, without seeking any act of execution. The boundary is actual enforcement (exécution). “The foreign judgment cannot permit recourse in France to enforcement measures before the exequatur decision” (Civ. 1re, 25 February 1986, no. 84-14.208, Bull. civ. I, no. 38). Secure and sue before exequatur; realise only after.

What Exequatur Unlocks Once granted, exequatur allows effect to be given to consequences that the foreign substantive law attaches to the judgment: “nothing prevents certain effects attached by the foreign law to the decision declared enforceable in France from

being taken into consideration”, subject to conformity with French international public policy (Civ. 1re, 25 February 1986, no. 84-14.208). The liquidator therefore does not acquire a French set of powers; it acquires such of its home powers as survive that filter. Exequatur may also be sought incidentally, by way of submissions in pending proceedings rather than only as a principal claim, and even for the first time on appeal where the defendant did not appear at first instance (Civ. 1re, 10 January 2018, no. 16-20.416, P+B) — which matters where a creditor has already moved. One limit deserves emphasis: exequatur of a foreign bankruptcy judgment is not itself authority to realise French assets. One limit deserves emphasis. Exequatur confers enforceability; it does not dispense with the acts of execution themselves. Recognition of a foreign bankruptcy establishes the liquidator’s status and the judgment’s authority in France, but each measure of realisation retains its own regime.

Key Takeaways For foreign counsel with a foreign insolvency and assets in France: ▪ To petition a separate insolvency in France you need no enforceable title — but you do need a final judgment, and you must prove cessation of payments. ▪

ntil the foreign insolvency U judgment is exequatured, individual creditors may enforce against French assets, even having proved in your proceeding. Treat exequatur as urgent.

▪

efore exequatur the insolvency B practitioner has standing to sue and to secure: conservatory measures and a fraud action are both available. Use them.

▪

xecution is the line. Nothing E may be realised in France before exequatur — and exequatur of the bankruptcy is not necessarily itself authority to realise.

Drelle removes an obstacle English and offshore creditors had reason to fear. In France that obstacle never stood in the same place. The exposure here is the interval before recognition, during which a foreign collective procedure has no protective effect whatever, and a welladvised individual creditor can lawfully empty the estate.

ThoughtLeaders4 FIRE Magazine • ISSUE 26

PRIVY COUNCIL TO CONSIDER WHETHER LIQUIDATION PRESERVES CLAIMS FROM LIMITATION

THE CONTINUED SIGNIFICANCE OF RITCHIE V LANCELOT Authored by: Jennifer Fox (Partner) & Eanna O’Connor (Associate) - Ogier Nearly two years after the Cayman Islands Court of Appeal (CICA) overturned the Grand Court’s decision in Ritchie Capital Management LLC et al v Lancelot Investors Fund Ltd (in Official Liquidation)1, the issue is now heading to the Judicial Committee of the Privy Council. The appeal, currently scheduled to be heard in October 2026, will determine whether a creditor whose claim exists and is not time-barred at the commencement of a liquidation can pursue that claim after the expiration of the ordinary limitation period. The answer is likely to be of considerable importance not only in the Cayman Islands but also across common law insolvency jurisdictions. Official liquidations frequently continue for many years, particularly where fraud, asset tracing or cross-border recovery proceedings are involved. Whether creditors must commence protective proceedings during a liquidation to preserve their claims has significant 1

implications for officeholders, creditors and the administration of insolvent estates.

The Dispute Lancelot Investors Fund Ltd (Lancelot), a Cayman Islands investment fund, operated as a feeder fund into the Thomas Petters group, which was later exposed as a multi-billion dollar Ponzi scheme. Lancelot entered official liquidation in the Cayman Islands on 10 December 2008.

The appellants (Ritchie), alleged losses exceeding US$200 million arising from investments connected to the Petters fraud and commenced proceedings against Lancelot in May 2019, asserting claims in deceit and unlawful means conspiracy. The proceedings were brought with the leave of the Court under section 97(1) of the Cayman Islands Companies Act (the Companies Act).2 Lancelot applied to strike out the claims on the basis that they were statute-barred. Parker J accepted that argument, holding that the six-year limitation period under the Limitation Act (1996 Revision) (the Limitation Act) had expired in 2014 and the commencement of the liquidation did not s prevent limitation periods from continuing to run in respect of ordinary litigation claims.

CICA (Civil) Appeal 005 of 2023

2 This section provides that “when a winding up order is made or a provisional liquidator is appointed, no suit, action or other proceedings, other than criminal proceedings, shall be proceeded with or commenced against the company except with leave of the Court and subject to such terms as the Court may impose”.

ThoughtLeaders4 FIRE Magazine • ISSUE 26 Compensation Scheme Ltd v Larnell (Insurances) Ltd (In Liquidation).7 Unlike the Grand Court, which had regarded Larnell as limited to proofs of debt, the CICA instead treated the decision as authority for the broader proposition that claims not time-barred at the commencement of the liquidation do not subsequently become time-barred merely through the passage of time.

The Grand Court’s Approach The Grand Court distinguished between claims pursued through the proof of debt process and claims pursued through ordinary court proceedings. Parker J held that the long-established principle derived from Re General Rolling Stock Ltd3 only protected creditors’ rights to prove in the liquidation but did not extend to standalone litigation brought against a company in liquidation. Since neither the Limitation Act nor the Companies Act expressly provided for the suspension of limitation periods, the ordinary limitation periods continued to apply.4 On that basis, Ritchie’s proceedings were found to be timebarred. Equally, much of the historical discussion surrounding General Rolling Stock arose in the context of proving debts in insolvency proceedings. The reasoning was not without force. The relevant legislation contains no express provision stating that time ceases to run when a company enters liquidation. Equally, much of the historical discussion surrounding General Rolling Stock arose in the context of proving debts in insolvency proceedings. The practical consequence of that analysis was that creditors would have been required to either agree tolling agreements with liquidators or to seek leave to issue protective proceedings during lengthy liquidations simply to preserve claims that would otherwise be resolved in the liquidation via a proof of debt.

The Court of Appeal Restores the Orthodox Position The CICA (Martin JA, Moses JA and Field JA) unanimously allowed the appeal, determining that the Grand Court had interpreted the General Rolling Stock principle too narrowly. Martin JA declared that the rationale underlying the General Rolling Stock principle is that, upon liquidation, the company’s assets become subject to a statutory trust for the benefit of creditors. In the Cayman Islands, that principle is reflected in section 140(1) of the Companies Act.5

(1872) LR 7 Ch App 179

Supra FN2 at [55]

“the third party’s claim against the insured is one to which the normal principles apply, namely that, if it is not time-barred at the commencement of the bankruptcy or winding up, it does not become time-barred by the passage of further time thereafter.”8

The Court considered that the critical question is whether a liability existed at the commencement of the liquidation, not the procedural mechanism used to establish it. Accordingly, the CICA held that there is no principled distinction between establishing a liability by proof of debt and establishing the same liability through ordinary court proceedings. Martin JA stated that: “there is no difference in this respect between a proof and an ordinary action: each of them is competent to establish the existence of the liability.”6 The Court therefore rejected the proposition that a liability could be provable in the liquidation while simultaneously becoming incapable of establishment through ordinary proceedings merely because time had elapsed after the commencement of the winding up.

The Importance of Larnell A central feature of the judgment was its reliance upon the English Court of Appeal’s decision in Financial Services

The CICA relied in particular on Lloyd LJ’s statement that:

The CICA’s Analysis The CICA accepted that the Limitation Act provides that actions in tort must be brought within six years. However, it held that when the statutory policies underpinning insolvency law and limitation legislation come into conflict upon a company entering liquidation, the insolvency regime must prevail. It provided three principal reasons:

5 This section provides that the “the property of the company shall be applied in satisfaction of its liabilities pari passu and subject thereto shall be distributed amongst the members according to their rights and interests in the company”. 6

Supra FN1 at [21]

[2006] QB 808

Ibid at [37]

ThoughtLeaders4 FIRE Magazine • ISSUE 26 1. The Limitation Act imposes a procedural bar on proceedings but does not extinguish the underlying cause of action. By contrast, the insolvency legislation imposes a system of rateable distribution which has a practical (although not legal) effect on the substance of the underlying claim by limiting recovery; 2. Insolvency law already overrides limitation principles in relation to proofs of debt under the General Rolling Stock doctrine; and 3. It is necessary for the proper operation of the statutory trust resulting from the insolvency legislation that liabilities existing at the relevant date should be included in the statutory scheme whatever the method used to establish them.9 Accordingly, the CICA held that the commencement of liquidation effectively stops the running of the limitation periods for liabilities existing at that date, provided they were not already time-barred.

What is Really at Stake Before the Privy Council? The forthcoming appeal is likely to test this analysis and focus on the proper scope of the General Rolling Stock principle, with the parties advancing competing characterisations.

Lancelot’s position is likely to emphasise that limitation periods are creatures of statute and that neither the Companies Act nor the Limitation Act expressly suspends their operation following the commencement of the liquidation process. On that analysis, General Rolling Stock is concerned with provability in the proof of debt process and should not be expanded into a broader rule applicable to ordinary claims outside that process. Ritchie, by contrast, is likely to contend that the principle has always been concerned with the treatment of liabilities existing at the commencement of the winding up and that there is no principled basis for distinguishing between different procedural mechanisms for establishing those liabilities.

Why the Outcome Matters The practical implications extend beyond the facts of the case. Official liquidations often run for many years. Fraud claims, contribution claims, professional negligence actions and other complex disputes may not be resolved until long after the commencement of the winding up. CICA’s decision allows creditors to establish liabilities that existed at the commencement of the liquidation without fearing that those claims will become time-barred during the course of the insolvency.

A reversal by the Privy Council could encourage the commencement of protective proceedings in long-running liquidations, increase costs and create additional procedural complexity for both creditors and officeholders. Conversely, upholding the CICA’s findings would reinforce the position that many insolvency practitioners had long assumed applied before Parker J’s decision and would provide authoritative confirmation of the relationship between limitation law and insolvency law in this context.

Conclusion The forthcoming Privy Council appeal presents a fundamental question about the treatment of liabilities in insolvency: whether a claim that existed and was not time-barred when liquidation commenced remains capable of establishment thereafter, regardless of the procedural route used to establish it. The CICA answered that question in the affirmative. The Privy Council will shortly determine whether that answer is correct.

Supra FN1 at [26]

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