Dispute Resolution
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9 Dec 2025
Insight
Bankruptcy petitions based on foreign judgments
A Court of Appeal decision has established that a bankruptcy petition cannot be presented on the basis of a foreign judgment which has not been recognised in England. The decision means that, before a creditor under a foreign judgment can petition for bankruptcy against the judgment debtor in this jurisdiction, it will need to either register the judgment under a relevant statutory scheme or (if those schemes don't apply) bring an action on the judgment at common law.
The judgment does not directly address winding up petitions against a company, as opposed to bankruptcy petitions against an individual, but the court's conclusion that an unrecognised and unregistered foreign judgment does not constitute a debt that can be pursued in England seems likely to be read across to the winding up context. Unlike a bankruptcy petition, however, a winding up petition can also be presented where the creditor proves that the value of the company's assets is less than its liabilities "taking into account its contingent and prospective liabilities" – which may include the liability represented by an unregistered and unrecognised foreign judgment.
For more information see our blog post here: Court of Appeal finds bankruptcy petition cannot be presented on basis of unrecognised foreign judgment.
Broad application of law on transactions defrauding creditors
The Supreme Court has confirmed that s.423 of the Insolvency Act 1986, which provides for the avoidance of certain transactions where they have been entered into for the purpose of defrauding creditors, has a broad application. It covers not only transactions entered into by the debtor personally, but also those entered into via the debtor's company.
The decision is welcome confirmation for creditors who are looking to enforce judgments against debtors with complex corporate structures, as it shows that a claim under s.423 cannot be thwarted by the introduction of a company structure between the debtor and the assets which are the subject of enforcement.
For more information see our blog post here: Supreme Court confirms broad interpretation of section 423 Insolvency Act 1986 relating to transactions defrauding creditors.
The decision is welcome confirmation for creditors who are looking to enforce judgments against debtors with complex corporate structures."
Liability for fraudulent trading not limited to company managers
The Supreme Court has confirmed that liability for fraudulent trading under s.213 of the Insolvency Act 1986 is not limited solely to persons responsible for company management and control. Any persons knowingly involved in the company's fraudulent business activities can be liable. The judgment means that third parties who know that a company's business is being run in a manner intended to defraud creditors and then participate in, facilitate, or assist with fraudulent transactions may be liable under the Insolvency Act 1986.
The Supreme Court separately considered whether limitation should be postponed under section 32 of the Limitation Act 1980 on the basis that, in the period for which a company had been dissolved, it could not with reasonable diligence have discovered a fraud. The Supreme Court's decision shows that this will not necessarily follow.
For more information see our blog post here: Supreme Court confirms the types of defendant who can be liable for fraudulent trading.
Scope of court's power to wind up unregistered companies
The Court of Appeal has upheld a decision refusing to wind up a Luxembourg sub-fund under sections 220 and 221 of the Insolvency Act 1986, which provide for the winding up of an "unregistered company" including an association or a foreign company.
This decision provides important clarity for UK creditors seeking to enforce their rights against foreign corporate structures (especially those whose corporate form does not have an analogy in English law, as is common in an investment funds context) and demonstrates the limits of the English court's winding up jurisdiction. It suggests that the IA does not permit the winding up in England of foreign investment fund compartments that lack separate legal personality, even if they are treated as separate entities for investment purposes.
For more information see our blog post here: Court of Appeal confirms “dedicated fund” of Luxembourg investment company is not an unregistered company for the purpose of winding up under the Insolvency Act 1986.
Chapters
- Disputes Yearbook 2025 – The view from London
- Alternative Dispute Resolution
- Arbitration
- Banking litigation
- Civil Fraud
- Class actions
- Commercial litigation
- Construction disputes
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- Financial services regulatory
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- Public law
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Legal Notice
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills Kramer 2026
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