Vol 16 (2019) - Issue 6

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Remote, Doubtful, Dubious, Probable, Likely: What are the Conclusions from BTI v Sequana?

Synopsis

In February 2019 the Court of Appeal handed down its much-anticipated decision in the appeals in BTI 2014 LLC v Sequana SA and others. Lord Justice David Richards, giving the only reasoned judgment, dismissed the appeals. The decision is significant for two points. Firstly, it resolves the interesting and previously uncertain question of whether an otherwise lawful dividend is capable of being a transaction at an undervalue for the purposes of the Insolvency Act 1986 ('IA 1986'). Secondly, after years of obiter comments at first instance, Sequana examines in detail at appellate level the question of when a company director’s duty to have regard to the interests of creditors arises. Contrary to several recent judicial statements, it now appears that the duty does not arise when a company is merely at a ‘real rather than a remote risk’ of insolvency.