The cases below are the seven most common case types Manolete deals with. The wording is meant to be broadly illustrative and should not be used as a legal reference.
Overdrawn Directors' Loan Accounts
This is one of the most common claims referred to Manolete. IPs needing assistance in recovering the debt for the benefit of the insolvent estate can assign the claim to Manolete to enable realisations to be made.
Breach of Contract
There are often instances where a company was a party to a contractual agreement prior to its insolvency and the other party is in breach, resulting in loss to that company. Common examples include claims under construction contracts or contracts for the supply of goods or services. The IP may wish to bring claims against the party in breach and seek damages, compensation or other remedies. Depending on the circumstances, the claim can be either be assigned to Manolete or funded by Manolete.
Misfeasance/ Breach of Duty
If directors of a company breach the duties set out on the Companies Act 2006, they can be pursued to compensate the company for any losses suffered as a result of those breaches.
Misfeasance claims against directors are often brought pursuant to Section 212 of the Insolvency Act 1986 in instances where a director has misapplied money or other property of the company and/or breached his duties as a director.
A breach of duty claim can be assigned to Manolete and there is often an overlap between breach of duty and the other claims set out in this section.
Relevant Provisions: Sections 171- 177 Companies Act 2006, Section 212 Insolvency Act 1986.
Transaction at Undervalue
A Liquidator or Administrator may wish to bring claims where company assets have been sold or transferred to another party for less than the true value of that asset (or for no value at all) in the two years before administration or liquidation and the company was insolvent at the time, or became insolvent as a result of the transaction. Insolvency is presumed if the transaction is with a Connected party.
A trustee in bankruptcy may wish to bring a similar claim in instances where an individual disposes of assets as a gift or for significantly less than that asset was worth in the five years prior to bankruptcy. If the transaction was entered into between two and five years prior to the bankruptcy, the individual must have been insolvent at the time of the transaction or became insolvent as a result of the transaction, but insolvency is presumed if the transaction is with an Associate.
A transaction at undervalue claim can be assigned to Manolete where the company entered into administration or liquidation on or after 1 October 2015. In administrations and liquidations prior to October 2015, and in bankruptcy, the claim can be funded by Manolete.
Relevant Provisions: Sections 238 and 339 Insolvency Act 1986.
Where a company gives a preference to a creditor which puts that creditor in a better position in the event of the company going into insolvent liquidation than it would otherwise have been, the liquidator can bring a claim to restore the position. The preference must have occurred within six months (two years if the party receiving the preference is connected with the company) before the onset of insolvency, the company must have been insolvent at the time of the preference or become so as a result of the preference and the company must have been influenced by a desire to prefer. Insolvency is presumed where the preferred party is connected with the company.
A trustee may wish to bring a similar claim in instances where an insolvent individual puts a creditor in a better position than that creditor would otherwise have been if the action was taken in the six months leading to his bankruptcy or two years if the creditor is an Associate of the bankrupt. The bankrupt must have been influenced by a desire to prefer, and such desire is presumed where the preferred party is an Associate of the bankrupt. The bankrupt must have been insolvent at the time of the preference or become so as a result of the preference; insolvency is presumed where the preferred party is an Associate of the bankrupt.
A preference claim can be assigned to Manolete where the company entered into liquidation on or after 1 October 2015. In liquidations prior to October 2015, and in bankruptcy, the claim can be funded by Manolete.
Relevant Provisions: Sections 239 and 340 Insolvency Act 1986.
Directors of a company are required to consider whether there are sufficient distributable profits available to pay a dividend to shareholders and the dividend must be with reference to relevant accounts. A dividend which contravenes either common law (such as a distribution out of capital) or Part 23 of the Companies Act 2006 (such as a dividend declared in excess of distributable profits) is unlawful. A shareholder who knows or has reasonable grounds to believe that a distribution contravenes the statutory rules is liable to repay it (or the portion that is unlawful).
An unlawful dividend claim can be assigned to Manolete.
Relevant Provision: Section 847 (2) Companies Act 2006.
Where a company continues to trade when the director knew or ought to have concluded there was no reasonable prospect the company would avoid going into insolvent liquidation, the liquidator can apply to the Court for an order that the director contribute to the company’s assets.
A wrongful trading claim can be assigned to Manolete where the company entered into liquidation on or after 1 October 2015. In liquidations prior to October 2015, the claim can be funded by Manolete.
Relevant Provision: Section 214 Insolvency Act 1986.