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HLC Environmental Projects Ltd, Re

[Also known as: Hellard v Luis De Brito Carvalho]

A director made payment to various creditors (including connected creditors) in the knowledge that the company was on the verge of insolvency. He was held to have breached his duty to act in the company's best interests and ordered to repay the sums paid away. The case is significant because the court had to consider an argument that since the payments had discharged liabilities of the company, the company had suffered no loss and this was a complete answer to the claim in misfeasance. The argument was rejected, both because the claim was analogous to a claim against a trustee to restore a fund that he had misapplied and because in any event the court retained a very wide discretion under s.212 Insolvency Act 1986 to order repayment in such circumstances.

Member of Chambers: Blair Leahy for the applicants (instructed by Norton Rose Fulbright LLP)

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