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Restructuring & Insolvency

Money for nothing – Section 127

In the recent case of Officeserve Technologies Limited v Annabel’s (Berkeley Square) Limited and Others the court found that a number of respondents were liable under Section 127 of the Insolvency Act 1986 to repay funds that they have received after the presentation of the petition.

What’s interesting in this case is that the liquidator, rather than taking individual actions against the recipient of the funds, simply took one action against all the recipients of the funds and left it to the recipients of the funds to make their own applications for validation orders.

The case was originally against 43 respondents. By the time it came to court nine months later, there were only 16 respondents remaining as all the other matters had been settled.

Of these respondents, the largest debt was £12,500 (there are only three debts over £6,000). The smallest debt was £384 (there were five debts of £1,000 or less).


Normally liquidators will not pursue debts of a low value in these types of claims under Section 127 as it’s not thought commercially viable. However this method of making a claim through the courts would make it viable to proceed against all recipients of funds rather than simply the larger amounts.

Whether liquidators are looking at Section 127 claims, or have cases still open that they have decided in the past not to pursue, this case encourages them to review claims that they have decided not to pursue in the past for commercial reasons.

Our Restructuring and Insolvency team is happy to review any possible actions you have with a view to dealing with them on a conditional fee agreement base.

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