Chadbourne & Parke has acted for Zelf Hussain and Robert Hunt of PricewaterhouseCoopers in their capacity as liquidators of Simon Carves Limited (SCL) to resist an application by Carillion Construction Limited to take over claims against the ultimate parent of SCL under s.423 of the Insolvency Act 1986, where Carillion claimed to be a victim.
SCL was an engineering business that went into administration in 2011 with debts of nearly £300m. It had, since its acquisition by the Punj Lloyd Group (PL) in 2007, been supported by the financial resources of the wider group. When it became clear that no amount of financial support would induce a recovery and that, despite extensive marketing, no buyer was interested in buying SCL, PL reluctantly withdrew financial support and SCL went into administration. The assets of SCL were subsequently purchased by a PL subsidiary, with the majority of employee jobs being saved.
Prior to administration, Carillion, which had been a sub-contractor on an SCL project, had been involved in arbitration with SCL that was yet to be finalised. Following administration, Carillion alleged that the letters of support provided to the SCL directors for the purposes of audit sign-off were, in fact, legally binding on PL and obliged them to settle all of SCL’s debts. Further, that the fact that SCL had not enforced the letters of support was a transaction defrauding creditors under s.423 Insolvency Act 1986.
The judgment of Sir William Blackburne was handed down on 27 March 2013 and he made it clear that he did not view the letters of support as binding on PL, noting that they were clearly addressed to the directors of SCL and not SCL itself. In the absence of any factual evidence provided by Carillion, whose case was based on inference, innuendo and allegation, the facts clearly pointed to the fact that neither SCL nor PL viewed the letters of support as binding. As such, there was no transaction.
Representing Chadbourne & Parke in London on behalf of the liquidators were insolvency and restructuring partner John Verrill and associate Craig Barrett.