This case related to sums received by a director which were claimed by the liquidators as preferences.
Max 99p Ltd traded a chain of discount retail stores. In January 2018 the company was insolvent and had liabilities exceeding £1m, evidenced by a contemporaneous balance sheet prepared by an insolvency practitioner. In early 2018, Mr Chingli, along with two others, acquired the company for £1 and all became directors. Between January and April 2018 Mr Chigili advanced approximately £199,000 to the company by way of unsecured loans.
Between April and July 2018, when the company remained insolvent, the company repaid Mr Chigili £147,659.44. Many of these payments left the company’s bank accounts almost empty, while significant trade creditors, HMRC and landlords remained unpaid.
The liquidators pursued Mr Chigili for these payments, claiming they were preferences under s. 238 Insolvency Act 1986. Mr Chigili raised two defences.
First, there was no desire to prefer because the repayments were pursued to a pre-existing obligation to repay. This was rejected. The judge found there was no commercially sensible reason for the agreement to repay Mr Chigili at a time when other creditors were not being paid. He was not for instance introducing any new money. The company was heavily insolvent and the payments were designed to enable Mr Chigili to be paid ahead of other creditors. The necessary desire to prefer was present in this case.
Second, Mr Chigili also relied on s. 239(3) Insolvency Act 1986 which gives the court discretion not to award relief. Among other matters, he raised delay, his lack of knowledge of the financial position of the company and that creditors were no worse off. The company went into liquidation in 2018, but the claims were not time barred and none of the books and records were handed over on liquidation.
The court was also not persuaded by Mr Chigili as a witness, and the fact he had received substantial sums himself and so was not preprepared to exercise its discretion to refuse relief. Contrast this with Credit Suisse v Softbank Group Corp. & Ors [2025] EWHC 2631 (a decision under s. 423 Insolvency Act 1986) where the court held declined to grant relief, despite all elements of the claim being made out.
In Re Max 99p Limited ]2026] EWHC 1009.
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