The liquidator brought proceedings claiming that the debenture was either a voidable preference or a transaction at an undervalue.

He accepted that he had lost the case, but he contended that the action had been properly brought (evidenced not least by the fact that it had survived a claim to strike it out).

The proceedings were brought (i) to set aside the bank's charge, fixed as well as floating, as a voidable preference, and (ii) to obtain compensation for wrongful trading by way of an order for contribution to the assets of the company.

[4]Although that was sufficient to dispose of the application, the court went on to consider the nature of the remedies open to the liquidator, and handed down the obiter dictum for which the case is best known.

The court noted that any sums recovered by the liquidator by way of unfair preference is not owned by the company and is not caught as after acquired property by the floating charge.

[3] The decision was cited with approval and followed by the Court of Appeal in Re Oasis Merchandising Services Ltd [1998] Ch 170.

The doubts expressed by Millett J about Re Barleycorn would be reinforced when he sat as part of the court that overruled it in Buchler v Talbot [2004] UKHL 9.

[6] However following that decision the position was reversed in part by statute, and where the creditors committee sanctions the legal proceedings, those will be treated as expenses in the winding up.