Supreme Court Mainzeal Judgment delivery
The Supreme Court’s long awaited Mainzeal judgment has been delivered this morning, with the directors’ appeal dismissed and liquidators’ cross-appeal granted in part. The directors have been found liable for breaches of s135 and s136 of the Companies Act 1993 following the receivership and liquidation of Mainzeal Property and Construction Ltd in February 2013. The Supreme Court’s approach to quantifying loss under s135 was the net deterioration approach (i.e. between the date of the breach and liquidation). On the facts no net deterioration was proved and so no award made. The approach to quantifying loss under s136 was the new debt approach (i.e. the losses to creditors associated with the breach of s136). This was assessed at $39.8m plus interest. The High Court’s assessment of culpability was applied, with the result that Mr Yan was held liable for the entire amount, and the remaining directors liable for 1/6th each, being $6.6m.