Case History – CIFL v DLD & CND

Background

CIFL is a provider of factoring services. DLD was a director of a company that utilised the services of CIFL. DLD’s company entered into creditor’s voluntary liquidation. DLD had signed a personal guarantee to CIFL. CND, being the wife of DLD had not had any involvement with DLD’s business. CND had not signed a personal guarantee; she was involved in the proceedings as she had a beneficial interest in the matrimonial home she shares with DLD and their young family.

CIFL suffered a shortfall of circa £20,000 in the insolvency and subsequently succeeded in obtaining a County Court Judgment against DLD. Following the County Court Judgment CIFL succeeded in securing a Charging Order over the matrimonial home of DLD & CND. 14 days later CIFL commenced possession proceedings in the High Court of Justice Queens Bench Division.

Bankruptcy proceedings were pending against DLD.

Actions

ICL Commercial Law was instructed following all of the above actions to assist DLD & CND in defending the possession proceedings and to advise DLD in relation to the bankruptcy proceedings. Counsel represented DLD & CND in the High Court proceedings.

Result

CIFL’s claim was dismissed; DLD and CND were awarded costs.

DLD was adjudged bankrupt.

CIFL threatened to appeal the dismissal of their application for possession. ICL Commercial Law quoted an authority Close Invoice Finance v Pile EWHC 1580 (Ch) BPIR 1645. It is highly likely that any Order for Possession pursuant to a Sale of Property Order would be suspended for a considerable period, and one that would exceed our clients’ repayment proposals because of the potential disruption to the judgment debtor’s family. The debtor’s financial position might improve and could not get any worse (he was bankrupt), and because the value of the property, even of declined, was likely to cover the debt after the delay.

CIFL accepted CND’s offer to settle the debt over 30 months and the possession proceedings were discontinued.