Purported largest ever preference claim successful

In February 2012, shares in Comet were sold by its owner, now part of the Darty (previously Kesa) Group to entities set up by OpCapita. As part of the arrangements in respect of that sale, an amount of just over £115m was repaid by Comet to an entity in the Kesa group.

Comet subsequently went into administration in November 2012 and liquidation in 2013. The conflict liquidator issued proceedings claiming that the repayment was a preference. The respondent raised a preliminary issue that the parties were unconnected under the insolvency legislation and therefore the claim was out of time, which failed.

Whilst complicated and convoluted, the liquidator argued that the completion mechanics resulted in a repayment of £115 million that put the recipient in a better position than it would have been in on Comet’s liquidation, as the debt was unsecured, with an intention to achieve that outcome and was therefore a preference.

The respondent raised various arguments including that there was no such a repayment, Comet was neither insolvent before nor after the repayment and, even if it was, there was no desire to prefer by what, at the time of completion, was mostly a new board installed on behalf of the purchaser.

Having found that there was the repayment alleged, the judge first held, having considered expert opinions, and preferring the opinion provided by the liquidator, that Comet was balance sheet insolvent immediately before the repayment.

On the question of desire, the judge held that “a desire to prefer must have been held by a person or persons involved in the debtor’s decision making process”. 

On the facts, the purchaser’s representatives on Comet’s board had left the sales process in the hands of a director common to both seller and purchaser and that as he and the seller had the desire to prefer, that was imputed on the new directors subsequently installed. 

In any event, the judge found that the decision to repay was entered into by the old Kesa board when contracts were exchanged, not when the sale completed.

The judge entered judgment for circa £90 million, being the difference between what she found the recipient would have received in Comet’s insolvency process and the repayment amount.

Carton-Kelly v Darty Holding SAS [2022] EWHC Civ 2873 (Ch)

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