Secondary preferential creditor distribution
MGL traded as a second-hand car dealership and entered compulsory liquidation on 2nd February 2022. With no reported assets in the Official Receiver’s report to creditors, the case was destined to remain with the Official Receiver as liquidator. By working with the petitioning creditor’s solicitors, Wedlake Bell, and obtaining support from HM Revenue & Customs who comprised 78% of the Company’s creditor group, Joseph Colley and John Dickinson of CBW Recovery LLP were appointed as joint liquidators in place of the Official Receiver on 11 May 2022.
The complex investigations into MGL’s affairs were led by Jonathan Reason which identified a number of antecedent transactions to be pursued for the benefit of creditors. Following extensive correspondence with the targets and the prospect of Court proceedings, the liquidators settled the claims. This has resulted in a dividend of 16.7p in the £ being declared to HM Revenue & Customs as secondary preferential creditors.
This case is a good example where, despite a company seemingly having no assets or recovery prospects, by having the creditors electing to appoint independent liquidators (or Trustees in Bankruptcy) who are experts in contentious insolvency matters, it can lead to successful claims being brought under the Insolvency Act 1986.
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