What does the decision in Invest Bank P.S.C. v El-Husseini [2023] EWCA Civ 555 mean for the 'corporate veil' and antecedent transactions in general?

The case of Invest Bank P.S.C. concerned, amongst other things, allegations pursuant to s 423 of the Insolvency Act 1986 (the "IA") (transactions defrauding creditors) by the Bank that the first defendant had entered into transactions with the remaining defendants in order to put assets beyond the reach of the Bank. Two key points arise from the decision.

The first is that the decision offers clarification on whether a director/shareholder can enter into a transaction with another person within the meaning of s 423 if their acts are actions of a company.  In this regard, the court held that they could, and a director may therefore be personally liable for their actions under s 423.  This is notwithstanding the separate legal personality of a company from its directors/shareholders.  The key considerations will be exactly what role the director/shareholder played in the transaction and the legal implications of this.

The second point arising from the decision concerns the definition of "transaction". The Court adopted a broad interpretation of the meaning of "transaction" and rejected the argument that a person cannot enter into a transaction unless it involves assets which are beneficially owned by that person. While this is good news for claims arising under s 423, it is unclear whether this broader reading of 'transaction' will apply to claims brought under s 238 (transactions at an undervalue) and 239 (preferences) of the IA. Although the broader interpretation applied by the Court of Appeal is yet to be tested, we expect it will be in the near future. In doing so, the Courts will need to balance consistency against broader policy considerations and fundamental principles of insolvency.