Office holders’ liability for conversion

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Section 234 of the Insolvency Act 1986 protects a liquidator from a claim in conversion.

The claimant director (Mr Bhabra), companies set up by the claimant and various family members of the claimant were all involved in the television and broadcasting industry, operating from a property referred to as the Studio. Valuable equipment was located at the Studio. HDS, one of the family companies, went into administration and then, in 2004, into liquidation.

The defendants were appointed as administrators and then liquidators of HDS. They sold assets that they believed belonged to that company to a third-party purchaser and subsequently surrendered the lease of the Studio. The claimants disputed that the assets were owned by HDS and brought proceedings against the liquidators for conversion of the items sold and those remaining in the Studio at the time of the surrender…

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