Case Digest No. 20 · Contentious insolvency
Section 423 discretion after a transaction at an undervalue
Credit Suisse v SoftBank [2025] EWHC 2631 (Ch)
The High Court found a transaction at an undervalue under section 423 of the Insolvency Act 1986 but exceptionally declined to grant relief after considering all the circumstances.
High Court (Chancery Division)
[2025] EWHC 2631 (Ch)
November 2025
Decision at a glance
The question, answer and consequence.
- Legal question
- The central issue was section 423 discretion after a transaction at an undervalue.
- Court's answer
- The High Court found a transaction at an undervalue under section 423 of the Insolvency Act 1986 but exceptionally declined to grant relief after considering all the circumstances.
- Practical consequence
- The case illustrates the breadth and limits of the court's remedial discretion once a transaction falls within section 423. It is valuable when modelling the relief needed to restore the position and the consequences for third parties.
Factual background
The first claimant invested through its Credit Suisse (Lux) Supply Chain Finance Fund (“the SCF Subfund”) in securitised notes that were originated and administered by Greensill Capital (UK) Limited (“GCUK”) under a programme known as the Fairymead Multi-Obligor Programme (“the Fairymead Note Programme”). The intended security for the programme consisted of certain rights (”the Participations”) granted under a Participation Agreement by a special purpose vehicle, Greensill Limited (“GL”), to its immediate parent company, GCUK. The Participations related to receivables sold, or purportedly sold, to GL pursuant to a Receivables Purchase Agreement (“the RPA”) by companies in the Katerra Group. The SCF Subfund held the beneficial interests in outstanding notes (“the Fairymead Notes”) purchased under the Fairymead Note Programme with an aggregate principal face value of circa $440 million. All of the Fairymead Notes defaulted when they matured and/or otherwise fell due for payment in March 2021. On 30 December 2020, certain transactions (“the Impugned Transactions”), comprising a Contribution and Exchange Agreement (“the CEA”) and a Share Transfer Agreement (“the TA”), were entered into
Issue
The central issue was section 423 discretion after a transaction at an undervalue.
Procedural history and reasoning
The claimant claimed that the Impugned Transactions rendered the intended security for the Fairymead Notes valueless, leaving GL with effectively no assets and resulting in its liquidation in July 2021. ISSUE Whether there was a transaction at an undervalue under s423 Insolvency Act 1986 and, if so, whether the court should exercise their discretion to grant relief. DETERMINATION OF THE ELEMENTS OF THE CLAIM “The Transaction” The claimants alleged that the CEA and TA taken together constituted the relevant transaction for the purposes of the claim under s423. The defendants alleged that the relevant transaction (the “Greensill/Katerra Transaction”) comprised fifteen agreements or arrangements including the understanding that the Greensill Group would apply the $440 million in purchasing or redeeming the Fairymead Notes.
The court concluded that the claimant’s position was to be preferred, namely that the relevant “transaction” for the purposes of the claim was limited to the Impugned Transactions and did not include the various other agreements or understandings pleaded by the defendants. This was the case as (i) the Impugned Transactions were the only agreements to which GL was a party or under which it acquired any rights or liabilities; (ii) the agreements were entered into over a period of some two months; (iii) the various agreements had different purposes; (iv) GL did not “enter into” any of the agreements other than the Impugned Transactions; and (v) GL was a special purpose vehicle and the securitisation structure was set up to ensure the Noteholders would be protected in the event of insolvency of the Greensill Group. “Undervalue” The claimants contended that the transaction was at an undervalue as, by entering the CEA, GL gave up its rights against Katerra under the RPA.
The defendants argued that the release of the obligations under the RPA had the consequence that GL was released from any obligations to pay equivalent amounts to GCUK. Hence, the release of Katerra’s RPA obligations effected by the CEA had no impact on GL’s net position. Miles LJ was unable to accept the defendants’ position as consideration must be assessed objectively by what the debtor receives, must enure to the benefit of the debtor and must be capable of being measured in money or money’s worth. Even on the wider view of the scope of the “transaction”, the payment of $440 million under the CLN was not a payment to GL and did not enure to its benefit. The court was also unable to accept the argument that the alleged arrangement that the $440 million payment would be used to buy or redeem the Fairymead Notes itself constituted consideration to GL. Therefore, there was no evidence that GL obtained value in money or money’s worth from the payment of $440 million under the CLN.
Decision and key points
The High Court found a transaction at an undervalue under section 423 of the Insolvency Act 1986 but exceptionally declined to grant relief after considering all the circumstances.
- Although there was a transaction at an undervalue under s423 Insolvency Act 1986 the court, exceptionally, declined to grant relief.
- The court has a broad statutory discretion as to remedy and should take account of all of the circumstances including, in this case, the fact that the value of an asset transferred fell to nothing through no fault of the transferee.
- The statutory purpose of relief is restorative and protective and relief should only be granted accordingly.
Why this decision matters
The case illustrates the breadth and limits of the court's remedial discretion once a transaction falls within section 423. It is valuable when modelling the relief needed to restore the position and the consequences for third parties.
Particularly relevant to: Creditors, office-holders, banks, transaction parties and asset-recovery litigators.