Sean Richard Ormsby Lindsay v Penny O’Loughnane & Anor (Re FX Solutions Ltd (in liquidation))
[2023] EWHC 2247 (Ch)
The Official Receiver & Anor v Omar Shazaad Nadeem (Bodystretch (UK) Limited, Re)
3 November 2023
[2023] EWHC 2735 (Ch)
High Court
A company director spent the company's money on himself and others when the company was broke. The court said he had to pay it all back.
Key Facts
- •Bodystretch (UK) Limited (Bodystretch) was placed into compulsory liquidation in May 2016 after ceasing trading in September 2015.
- •Omar Shahzaad Nadeem was Bodystretch's sole director and shareholder until June 2011.
- •The Official Receiver (OR) brought proceedings against Nadeem under sections 212, 238, and 239 of the Insolvency Act 1986 (IA 1986).
- •The proceedings concerned payments made to Nadeem before and after the sale of Bodystretch's premises in September 2015 for £725,000.
- •The OR alleged breaches of Nadeem's director duties under the Companies Act 2006 (CA 2006), transactions at an undervalue (section 238 IA 1986), and preferences (section 239 IA 1986).
- •Nadeem claimed the payments were for salary, expenses, and repayment of a loan, but provided insufficient evidence.
Legal Principles
Liquidator's right to bring action against a director for misapplication of company money or breach of duty
Insolvency Act 1986
Director's duties under the Companies Act 2006 (acting within powers, promoting success of the company, reasonable care, skill and diligence, avoiding conflicts of interest)
Companies Act 2006
Transactions at an undervalue
Insolvency Act 1986
Preferences
Insolvency Act 1986
Relief from liability for directors who acted honestly and reasonably (section 1157 CA 2006)
Companies Act 2006
Outcomes
Nadeem must repay £95,079.39 (Pre-September Payments), £140,939.50 (September Payments), and £170,153.10 (Third Party September Payments) with interest from 21st September 2015.
Nadeem breached his director duties by making payments without proper consideration for creditors, engaging in transactions at an undervalue, and giving preferences while the company was insolvent. Insufficient evidence was provided to support Nadeem's claims.
No relief granted under section 1157 CA 2006
Nadeem did not act reasonably in dissipating the sale proceeds while the company was insolvent. No justification for an equitable allowance was provided.