Summary judgment granted against director of insolvent company

Summary judgment granted against the director of an insolvent company who had acted in breach of his duties and caused loss to the company's creditors as a whole.

The company imported medicines into the UK from the EU and sold them to UK wholesalers. It repackaged, relabelled and sold the medicines to UK wholesalers for a profit. In 2018, a compulsory winding-up order was made against the company. The estimated deficiencies in January 2019 were circa £2.6 million.

The claimant, one of the company’s creditors and an assignee of the company’s claims, brought a claim against the defendant for breach of his director’s duties, alleging the defendant had made “hasty, undocumented, high-risk investment decisions” at a time when the company was insolvent. This involved making advance payments to foreign companies for the supply of medical devices without any written contracts or due diligence, and without receiving anything in return. The claimant sought reimbursement from the defendant in respect of several impugned transactions.

The claimant then applied for summary judgment against the defendant company director.

During interviews with the liquidator, the defendant was evasive and gave inconsistent answers about where the evidence regarding the impugned transactions was.

The application for summary judgment was granted by the court on the basis the defendant could not produce any evidence of that the impugned transactions were for the company’s benefit. The defendant therefore failed to put forward sufficient evidence to satisfy the court that he had a real prospect of successfully defending the claim at trial. The court ordered the defendant to compensate the claimant for the losses caused to the company by causing or allowing the impugned payments to be made.

In reference to the matter of PK Investments Ltd v Sabaratnam [2024] EWHC 2188 (Ch).

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