Quicksons (South and West) Ltd. v Katz & Anor

Facts

Buildlead Limited was the wholly owned subsidiary of Quicksons (South and West) Limited. Each company in the group had given the bank, Lloyds, a debenture securing its indebtedness by fixed and floating charges, overdraft facilities were made available to Quicksons alone, and it was a term of those facilities that the bank could require any subsidiary to transfer credit balances to Quicksons' account while that account stood in overdraft. During August 1997 the Company transferred approximately £155,000 to the credit of Quicksons' account with the bank, and on 2 September 1997 the Company was placed in creditors' voluntary winding up, its statement of affairs showing a small surplus against preferential creditors but a substantial deficit against unsecured creditors. Mr Kelmanson was appointed liquidator on the winding-up resolution, Mr Katz joining him as joint liquidator on 13 October 1997. From April 1998 Mr Katz sought without success to establish the extent of Quicksons' overdraft at the time of the transfers, and on 31 October 2002 the liquidators applied under section 236 of the Insolvency Act for information from both the bank and Quicksons. On 14 January 2003 Quicksons issued proceedings to remove the liquidators under section 108(2) of the Insolvency Act 1986, its points of claim running to 38 pages and alleging that the liquidation had been unnecessarily prolonged to generate fees. The liquidators applied for security for their costs of those proceedings in the sum of £59,750.