GamlestadenFatigheter AB v Baltic Partners [2007] 4 All ER 164

• Claimant, a company, was a shareholder in Defendant but also a creditors of Defendant.

• Claimant sued Defendant’s directors under Jersey version of section 994, alleging unfair prejudice caused by mismanagement.

  • If action was successful, Defendant would receive funds that were enough to pay off Defendant’s creditors but not enough to allow for any distribution (in form of dividends) to Defendant’s members.

• Defendant sought to have action struck out on grounds that Claimant was sung in capacity as a creditor.

Lord Scott

• Claimant 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 Claimant.

• However this financial benefit need not be in Claimant’s capacity as a member

  • Suffices that it is in Claimant’s capacity as a creditor. 

• Thus fact that any money received by Defendant would be used to pay off Claimant as a creditor (and that there would be none left to give to Defendant’s shareholders) did not matter.

• Thus Claimant not barred from making s.994 application.