Vol 22 (2025) - Issue 4

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A Common Sense Approach to Section 423 Insolvency Act 1986: El-Husseiny v Invest Bank [2025] UKSC 4

Synopsis
This case considered a single but important point on the function of section 423(1) of the Insolvency Act ('IA 1986'). Section 423(1) relates to transactions entered into at an undervalue which stops debtor's from intentionally putting assets beyond the reach of creditors by transferring assets for little or no consideration (i.e. selling/transferring assets for below their market value). If found in breach of this provision, the court has the power to void the transaction and restore the position to what it would have been if the transaction had not been entered into. In El-Husseiny and another (Appellants) v Invest Bank PSC (Respondent) [2025] UKSC 4 ('El-Husseiny'), the Supreme Court had to consider whether section 423 applies only to assets personally owned by a debtor or whether the rules could be applied to assets held indirectly by a debtor.
The Supreme Court held that section 423 could apply to assets held indirectly by the debtor meaning that creditors could seek to void a transaction if it is shown that the debtor intended to put assets beyond the reach of the creditors. We consider the details of the case below.