insolvent company files

Case Study: Insolvent Company

Insolvent company – unlawful preference payments, transactions at an undervalue and misfeasance

The Problem

The former directors of an insolvent company were being pursued for the repayment of sums for which they had personally received from the company, at a time when the company was insolvent. 

The payments which the directors were not entitled to receive were paid to them either as salary or dividends, in preference to other creditors of the company. At the date of liquidation, the company owed it’s creditors over c.£180,000, who were left unpaid.

How Escalate helped

The former Directors simply refused to engage other than to tell the liquidators that they would have to issue a claim to recover any money from them. There were no funds in the company to pursue the directors, and no creditor was in a position to fund the litigation, so the liquidators engaged with Escalate. 

Escalate issued the application and pursued the case to a mediation. Eventually we made a recovery for the insolvent estate, which produced a return to its creditors.

Amount Total


Armstrong Watson has been given the rights to use this case study by Escalate, an award-winning, accountancy-led commercial dispute resolution service.