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GamlestadenFatigheter AB v Baltic Partners

[2007] 4 All ER 164

Case summary last updated at 23/01/2020 17:54 by the Oxbridge Notes in-house law team.

Judgement for the case GamlestadenFatigheter AB v Baltic Partners

C, a company, was a shareholder in D but also a creditors of D. C sued D’s directors under Jersey version of section 994, alleging unfair prejudice caused by mismanagement. If action was successful, D would receive funds that were enough to pay off D’s creditors but not enough to allow for any distribution (in form of dividends) to D’s members. D sought to have action struck out on grounds that C was sung in capacity as a creditor. Held:
 
Lord Scott
·       C may sue for corporate relief (i.e. payment of money to company in which he is a member) only if there is some financial benefit to be derived from that by C.
·       However this financial benefit need not be in C’s capacity as a member
Ø  Suffices that it is in C’s capacity as a creditor. 
·       Thus fact that any money received by D would be used to pay off C as a creditor (and that there would be none left to give to D’s shareholders) did not matter.
·       Thus C not barred from making s.994 application.

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