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Hi,
I am having difficulty in understanding the Mareva injunction. Can you explain it to me please? Also if you are familiar with the Mareva case can you please explain the facts and decision to me? Thanks.
KJ
When you, a petitioner, approaches the Court asking for an entity to be liquidated, the entity directors could say to the Court “Can you give us another week because we believe that we shall be able to sort out our financing problems” The Court says “Yes, ok. Come back to Court next Monday and we’ll see where you’re up to”
The directors go back to their offices and sell all the entity’s property and inventory to another entity that they have just set up.
When next week the Court grants a liquidation order because the entity couldn’t get financing in place, the liquidator goes in and …. there’s nothing there. No inventory, no PPE, no cars – nothing. It’s all been sold at heavily discounted valuations to the other entity (controlled by the directors)
So there you are, a payable of the first entity, with no chance of getting any money out of the liquidation
You should have asked for a freezing order to prevent the directors from selling everything!
Does that explain it?
Yes it does, thank you. I’d also like to understand what took place in the Mareva Compania v International Bulkcarriers case.
Well, it’s a complicated case that involves the Appeal Court struggling to decide whether to grant an extension of an injunction and eventually deciding that they could
The effect of the injunction was to prevent the possibility of Bulk Carriers from taking money from their bank account so they would then rightly claim that they had no money and could not pay Mareva
How much more do you need?
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