CR-2024-000675 - [2025] EWHC 2069 (Ch)

At all material times, the Respondents were directors of the Company (their alleged resignations on the Presentation Date with purported retroactive effect was window-dressing, with no effect on their status as de facto directors).

As such directors, they owed it the duties set out in ss.171 to 177, 386 and 388 of the Companies Act 2006 and at common law including a continuing duty to account for its assets and to explain their dealings with its property.

Between 9 May 2021 and 5 February 2024, the Respondents treated the funds of the Company as available when needed to be diverted unlawfully for their own use and benefit and without regard (or, alternatively, without due regard) to its interests. For this purpose, they operated what they described as “directors’ loan accounts” with the Company (“DLA”). The Liquidators’ case is that the DLA was not a true loan account (i.e. properly so-called) but a misleading label to conceal a long series of unlawful diversions of the Company’s property to or for the Respondents’ benefit/convenience (“Diversions”). It is said that even a cursory review of the descriptions of items of expenditure in Annexes 1G and 1H to the POC reveals a wide range of random personal expenditure and round sum withdrawals.

After much detailed analysis, the liquidators’ forensic team have identified Diversions in the total sum of £4,143,419.26 caused or allowed by the Respondents in breach of their duties. The Company has suffered loss in at least this sum. A substantial sum in interest is claimed in addition which continues to accrue at a daily rate of £908.15.

If and in so far as, contrary to the liquidators’ primary case, any of the Diversions constituted repayments of a loan or loans (properly co-called) to one or both of the Respondents, the liquidators’ case is that they caused or allowed the Company to become indebted to them in breach of their duties as its directors, such that any such loans were not properly repayable by the Company.

Further, the Diversions were received to or for the benefit of the Respondents in circumstances which gave rise to an immediate remedial constructive trust of the same for the benefit of the Company.