Re Patrick and Lyon Ltd
1933 · [1933] Ch 786
Posted By lanbuk.com
- Facts
- Directors of an insolvent company secured in their own favour and carried on trading. The liquidator sought to make them personally liable for .
- Issue
- What does 'intent to defraud' require?
- Held
- Maugham J held that the words connote actual dishonesty involving, according to current notions of fair trading among commercial men, real moral blame. It was not shown.
- Principle
- Fraudulent trading requires real dishonesty, not just trading while insolvent.
- Why it matters
- It is persuasive on section 458 of the Act.
Words and Latin in this note
- Fraudulent trading
- Carrying on a company's business with intent to defraud creditors or for a fraudulent purpose. Under section 458 directors knowingly party to it may be made personally responsible for the company's debts. Open the note.
- Debenture
- A document that creates or acknowledges a debt owed by a company, often secured by a charge. A debenture holder is a creditor, not a member. Open the note.
For study only. By lanbuk.com. Always check current sources and consult a qualified professional.