Christopher Parker KC and Andrew Westwood KC, instructed by Jamie Leader at Enyo Law LLP, acted for the successful liquidators in an important decision of the Supreme Court on the scope of the fraudulent trading provisions in section 213 of the Insolvency Act 1986 (“IA 1986”) in Bilta (UK) Ltd v Tradition Financial Services Ltd [2025] UKSC 18.

The judgment of the Supreme Court considers two questions. The first involves the correct interpretation of section 213 of the IA 1986 and whether those who can be made liable under the section are confined to those involved in the management or control of the companies in question (“insiders”). The second involves the question of how the test in section 32(1) of the Limitation Act 1980 - whether a claimant could with reasonable diligence have discovered fraud, concealment or mistake – operates during a period when a company has been dissolved and its interaction with the deeming provisions on restoration under section 1032(1) of the Companies Act 2006.

On the first issue, the Supreme Court held that the application of section 213 IA 1986 is not limited to those who were involved in the management or control of the relevant companies. The natural meaning of the statutory words – “any persons who were knowingly parties to the carrying on of the business” of the company “for any fraudulent purpose” – is wide enough to cover not only “insiders” but also persons who were dealing with the company if they knowingly were parties to the fraudulent business activities in which the company was engaged. Such persons could include those who transacted with the company in the knowledge that by those transactions the company was carrying on its business for a fraudulent purpose. There is nothing in the statutory context surrounding section 213 to militate against giving the critical statutory words that natural meaning.

On the second issue the Supreme Court held that all that is to be deemed to be true about a restored company is that it continued in existence during the period of its dissolution, no more and no less. Whether it should be assumed during that period to have had competent directors or liquidators and what might have been discovered is to be answered on a balance of probabilities as a question of fact (counterfactual not historical) by reference to such evidence as is adduced by the parties and paying appropriate regard to the burden of proof if evidence is lacking.

The full judgment can be found here: Bilta (UK) Ltd v Tradition Financial Services Ltd