Genesis (2014) UK Ltd operated a haulage business. Following regulatory issues, the company lost its operator's licence and subsequently became the subject of a worldwide freezing order obtained by SQN Global Ltd (SQN).
SQN alleged that funds were diverted away from the company and assets were transferred to associated entities to place them beyond the reach of creditors. The claims were brought against six individuals alleged to have been involved in those arrangements, including directors, de facto directors and others connected with the business. The defendants failed to file defences and were debarred from defending the proceedings. None attended the disposal hearing.
On the facts, the court concluded that the company's affairs had been conducted with the intention of putting assets beyond the reach of creditors. The evidence demonstrated the diversion of payments, breaches of the freezing order and the transfer of assets to another company without proper consideration.
The claims succeeded against three defendants who were found to have been responsible for, or actively involved in, the diversion of payments and disposal of assets. One defendant was found liable, but only in relation to the transfer and use of assets through another company. The claims against the two defendants failed because the evidence did not establish their knowing participation in the fraudulent conduct.
Although the court found that fraudulent trading had occurred, it rejected parts of SQN's case that relied on hearsay, recollections of conversations, Facebook photographs and unsupported third-party allegations. By contrast, contemporaneous emails, banking records and other documentary evidence carried significant weight.
The decision is a reminder that allegations of fraudulent trading require more than suspicion or association. Claimants must prove both dishonest participation and loss with cogent evidence, even where a defendant has chosen not to engage with the proceedings.
SQN Global Ltd v Hughes and others [2026] EWHC 2056 (Ch)
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