One Hundred Pence In The Pound Case was a case about a property company. It started out as one in which there appeared no prospect of a dividend to any class of creditor.
By the end of the case the position had transformed because the proving unsecured creditors received one hundred pence in the pound with interest. Indeed, our CEO, Elliot Green who was appointed as the Liquidator, ended up closing the case by making a six figure distribution to the company’s shareholder(s). How did that happen?
For the avoidance of any doubt, this was not a solvent Members Voluntary Liquidation in which unsecured creditors can anticipate receiving one hundred pence in the pound as a matter of routine procedure. This was a Compulsory Liquidation in which for unsecured creditors to receive one hundred pence in the pound is the exception very much rather than the rule.
In the case in question, the unsecured creditors were paid one hundred pence in the pound due to the actions of the Liquidator, our CEO, Elliot Green.
The Property Company: The One Hundred Pence In The Pound Case
The company that went into Liquidation was in essence a vehicle that purchased a residential property in East London. This however was not known at the commencement of the case because there were no records produced by the company’s Director and his cooperation was very limited.
However, investigations revealed that the company had obtained a residential property and after it had been acquired by the company, it was transferred for no consideration to a connected company. It was then transferred again to another connected company, again for no consideration.
Upon investigations and discovery following attempted Records Reconstruction of the company’s records, our CEO, Elliot Green sought an order from the Court that the property be returned to the company. First, this was sought in relation to the legal interest and then subsequently there was a Trial to determine the beneficial interest. The Court handed down its judgment and made an order that the beneficial interest also belonged to the company.
However, that was not the end of the story because the property comprised two flats with two tenants, along with a whole raft of health and safety issues to address.
Discovery of the property being tenanted meant that the issue of the rental income that the Director had not accounted for, set in motion another matter that needed to be resolved. The Director appeared to have assumed incorrectly, that he did not need to account to the company for the rental income. However, as it turned out he had to relinquish not only the property to the company but all the rental income as well.
The Rental Income Dispute
The rental income was the subject of litigation also because of the failure to keep proper Company And Accounting Records. This meant that there was uncertainty about the amount of rent that had been pocketed by the Director.
After further litigation, the overall effect was to take a hopelessly insolvent company and not only pay the unsecured creditors in full, one hundred pence in the pound with interest but to turn the company, in effect into a solvent one, where there was a surplus available to distribute to the shareholders.
The One Hundred Pence In The Pound Plus Interest
It did take a considerable number of years before the unsecured creditors recovered their money. Not only did they recover their debt but they also recovered it with interest as permitted under the Insolvency Act 1986.
Oliver Elliot’s CEO, Elliot Green acted throughout on a No Recovery No Fee type basis, running the case for a considerable number of years at real as opposed to remote risk that he would not be paid for the services provided to attempt to fulfil the duty of Liquidator, ie. to get in realise and distribute the assets of a company in Liquidation.
The One Hundred Pence In The Pound Plus Interest And Costs
What made this case notable is that in order to pay the unsecured creditors, One Hundred Pence In The Pound plus interest, the costs of the Liquidation, including but not limited to the Liquidator’s Fees and the legal fees of the Liquidator also had to be discharged.
In a Liquidation, the costs and expenses of the Liquidation rank ahead of the unsecured creditors when money has been recovered and is available to be distributed.
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