Simon Burn Solicitors successfully defend director in circa £6,500,000 wrongful trading claim.

We have successfully defended Mr Robin Ellis from a claim brought by AIM listed insolvency litigation funders Manolete Partners PLC.

Manolete purchased claims from the Liquidator of a company called Bright Software Future Limited which went into liquidation in February 2016. The company had been started by Mr Ellis’ partner. It was a socially worthwhile venture aimed at providing employment and training opportunities in software development for young people in deprived areas of the Northwest. 

The company was supported by a grant and loan from The Regional Growth Fund. Mr Ellis put in approximately £2,000,000 of his own money to fund the company which he lost when the company went into liquidation. 

Mr Ellis was a non executive director and didn’t have any involvement in the running of the business. 

The principle claim pursued against Mr Ellis was for wrongful trading under Section 214 of The Insolvency Act. Manolete claimed that Mr Ellis should have stopped the company from trading from 31 January 2015 at the latest and that his failure to do so meant the company’s deficiency to its creditors increased by over £6,500,000. This was disputed by Mr Ellis who maintained that he had not caused the deficiency to increase at all. 

The trial took place in March 2020 in front of Mr Richard Spearman QC sitting as a Deputy High Court Judge in the Chancery Division. The Judge dismissed that claim in its entirety holding that;

“it would in my judgement be very harsh on Mr Ellis that he were held liable for wrongful trading on the facts of this case. He was not irresponsible and nor did he close his eyes to the reality of BFS’ position or allow BFS to carry on trading after it was or should have been obvious to him that BFS was insolvent and had no reasonable prospect of trading out of difficulty”

The Judge also dismissed a claim for £325,000 alleging a transaction at an undervalue in breach of Section 238 of The Insolvency Act. The Judge did allow one small claim for a preference under Section 239 of The Insolvency Act 1986 in the sum of £188,769. 

We acted for Mr Ellis throughout and with the assistance of Counsel, Michael Green QC of Fountain Court.

Click here to read the full Judgment.