Failed attempt to strike out wrongful trading claims

Published on
2 min read

As is standard in wrongful trading proceedings, the liquidators in this case pleaded alternative dates by which the directors knew or ought to have known that the companies had no reasonable prospect of avoiding insolvent liquidations.

The directors alleged that such pleadings were so vague that they were unable to understand and defend those allegations, particularly as no figures as to loss were pleaded in respect of the dates specified. The liquidators’ position was that there was no requirement to plead the loss claimed as that would be established by expert reports.

The judge agreed with the liquidators and held that the directors were able to understand the case against them from the pleadings and that, whilst the claims did not plead loss, that would come from the contention and challenge in the parties’ experts’ reports. The issue will then be determined by the trial judge.

The court therefore supported the route that insolvency practitioners tend to follow, when issuing wrongful trading claims, in pleading a variety of dates to ensure that the date ranges are not too generic, but also to avoid pleading one or too few dates and/or periods and failing to establish their case based on that specificity.

The judge raised authorities where wrongful trading claims had failed for a lack of particularisation, but supported the approach of loss being determined through the experts’ reports at trial and not having to be specifically pleaded at the start of an action.

Re BHS Group Limited and others [2021] EWHC 3401 (Ch)

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