Swan (liquidator) v Sandhu & Anor, Court of Appeal - Chancery Division, December 02, 2005, [2005] EWHC 2743 (Ch)

Reporting Judge: [2005] EWHC 2743 (Ch)

President: Swan (liquidator) v Sandhu & Anor

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Extract

Swan (liquidator) v Sandhu & Anor, Court of Appeal - Chancery Division, December 02, 2005, [2005] EWHC 2743 (Ch)

Neutral Citation Number: [2005] EWHC 2743 (Ch)

Case No: 4169 of 2002

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

COMPANIES COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 02/12/2005

Before:

THE HON. MR. JUSTICE EVANS-LOMBE

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Between:

| |JULIE SWAN |Applicant |

| |- and - | |

| | | |

| |SURINDER KAUR SANDHU | |

| |SALVINDER SINGH SANDHU |Respondent |

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Jane Giret QC / Birgitta Meyer (instructed by Oughton Graeme) for the Applicant

David Marks (instructed by Brooke North) for the Respondent

Hearing dates: 1-3 & 7-8 Nov 2005

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Judgment

The Hon. Mr. Justice Evans-Lombe :

1. In this case the Applicant, Julie Swan (“the Liquidator”), as Liquidator of K&K Knitwear Ltd (“K&K”) claims against the Respondents, Surinder Kaur Sandhu (“Surinder”) and her younger son Balvinder Singh Sandhu (“Balvinder”) relief under section 212 of the Insolvency Act 1986 in respect of their misfeasance in procuring K&K to enter into certain transactions of subordination, postponement and capitalisation of loans entered into by K&K with a related company P&P Designs Ltd (“P&P”), at all material times controlled by Balvinder’s elder brother Kalvinder Singh Sandhu (“Kalvinder”) and also the transfer of the business of K&K to Kay Textiles Ltd (“KT”), a company controlled by Balvinder. The material events occurred during the years 1999 and 2000. At all material times during those years Surinder and Balvinder were controlling shareholders and directors initially of K&K and later of KT on its incorporation. In 1999, Kewal Singh Sandhu (“Kewal”) the husband of Surinder and father of Balvinder and Kalvinder was director of K&K but resigned as such in the course of the year 2000. The Liquidator contends that the transactions associated with loans by K&K to P&P and the transfer of the business by K&K to KT were transactions at an undervalue contrary to section 238 of the 1986 Act and intended to put assets out of the reach of creditors of K&K contrary to section 423 of that Act.

2. The background facts of this litigation are as follows: K&K was incorporated in 1975 to take over the wholesale clothing business, until that time being conducted in partnership by Kewal and Surinder who were, initially, the only shareholders and directors of K&K. The nature of the business of K&K was the purchase of ready made clothes and their onward sale at a mark up to retailers from leasehold premises in the W...

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