Clydesdale Financial Services & Ors V Smailes & Ors

Colman Coyle's Commercial Litigation Team is acting for the first two Defendants in this action which has been described by The Lawyer as one of the top 10 litigation cases of 2010.

The case arises following the sale of the business of a solicitors' practice which was in financial difficulties. 

Colman Coyle's Insolvency Team acted for Mr Smailes and Mr Ryman, who are both Licensed Insolvency Practitioners and the assets of the business were sold to a third party for £1.9m, the vendor entering into administration immediately prior to the sale making this in effect a "pre-pack".

Clydesdale Financial Services (CFS) and Justice Capital Limited (JCL) had loaned substantial sums to the previous business and they along with Focus, an insurer, brought proceedings for an injunction in effect seeking to overturn the sale. 

CFS and JCL claimed security over certain assets and all three Claimants contended the business was sold at a substantial undervalue.

After several hearings and a number of days in the Chancery Division our clients successfully defeated all the claims against them for interim relief, However the Court considered that as the circumstances of the sale required investigation, Messrs Smailes and Ryman should be replaced as they could not property investigate in these circumstances.

Despite succeeding on this limited ground the Claimants were deprived of their costs on the case as they had made serious allegations of conduct which the Court dismissed. 

Our clients were awarded substantial costs in respect of the original Applications to overturn the sale which was unsuccessful.

Subsequently, we have successfully had the claims of JCL and Focus struck out in their entirety with costs ordered in our clients favour. 

At the time of writing, the Court has set a hearing in the summer of 2010 to determine CFS's claims to be a secured creditor as a Preliminary Issue.

Messrs Smailes and Ryman continue to deny any liability.