Company asset transferred for no consideration by individual debtor is a transaction at an undervalue

An individual debtor, Mr Ahmad El-Husseini (Mr El-Husseini), had Abu Dhabi judgments against him for c£20m which the respondent bank was seeking to enforce against him in the UK. 

Mr El-Husseini had transferred various assets to his sons for no consideration, including a property worth £4.5m, which was legally and beneficially owned by Marquee Holdings Limited (Marquee), at a time when he was the sole beneficial owner of all the shares in Marquee. The result was that Mr El-Husseini’s shareholding in Marquee was reduced in value and the respondent’s ability to enforce the judgments was adversely affected by £4.5m.

Mr El-Husseini’s sons argued that the transaction fell outside of the scope of s.423 because it involved the transfer of an asset that wasn't owned directly by Mr El-Husseini. The lower court rejected that argument, and that decision was upheld by the Court of Appeal. 

Mr El-Husseini’s sons appealed to the Supreme Court who dismissed the appeal and held: (1) the transaction in question fell within s.423 and there was no requirement for Mr El-Husseini to dispose of property belonging to him; and (2) the mental element required by s.423, that the transaction was entered into for the purpose of putting assets beyond the reach of a creditor, was satisfied without difficulty.

Mr El-Husseini procured that Marquee, a solvent company, transfer the property to his son for no consideration which resulted in a diminution in the value of Mr El-Husseini’s shares, in Marquee. This in turn prejudiced creditor’s ability to enforce the judgment as it removed an asset of the company that might otherwise have been available for enforcement against Mr El-Husseini. 

El-Husseiny v Invest Bank PSC [2025] UKSC 4

Our content explained