The liquidator of Purpoint Ltd, a printing business, sued the former director Mr John Henry Meredith for wrongful trading and misfeasance under the Insolvency Act 1986 sections 212 and 214.
Purpoint Ltd started trading in February 1986, with a plant and machinery, a printing press and two cars on hire purchase.
The liquidator brought an action under section 214 and under section 212 claimed back money used to get the second car on hire purchase, which it said was not needed for the business; cash sums withdrawn in June and July 1987 and transactions between the company and the firm Mr Meredith left to work with.
He said the answer to double recovery arguments is that money recouped under s 212 can be used to pay off the debts that existed before the clock started to run under section 214.
The only proviso is that Mr Meredith would not be made to pay back more under section 212 than needed to meet the company's liabilities.