The Supreme Court’s recent decision in Bilta (UK) Ltd (in liquidation) and others v Tradition Financial Services Ltd (2025) UKSC 18 is a landmark case for insolvency practitioners. It not only clarifies the scope of fraudulent trading under section 213 of the Insolvency Act 1986 but also delivers a stark reminder about the strict evidential demands of limitation law in fraud cases.

For those pursuing claims against third parties connected to insolvent companies, the judgement offers both opportunity and caution.

At Annecto Legal, we help restructuring professionals navigate the many retainer, funding and insurance products offered across the market. By offering tailored litigation support and funding solutions, we help insolvency practitioners to investigate, prepare and pursue claims with confidence.

Background to the case

The case arose from the collapse of companies alleged to have engaged in missing trader intra-community (“MTIC”) fraud. This type of VAT fraud involved importing goods VAT-free from one EU country, selling them domestically with VAT added, and then allowing the company to enter insolvency, leaving HMRC with substantial unpaid liabilities. Bilta (UK) Ltd and its associated entities (the Bilta Companies) were said to have been active participants in such schemes, ultimately leading to their liquidation.

Tradition Financial Services Ltd (TFS), a broker, was accused of facilitating the transactions at the heart of the fraud. The Bilta Companies and their joint liquidators brought claims against TFS on two grounds: first, that it had dishonestly assisted the directors in breaching their fiduciary duties (the Dishonest Assistance Claims); and second, that it was jointly liable with those directors for fraudulent trading under section 213 of the Insolvency Act 1986 (the Fraudulent Trading Claims).

TFS contested both sets of claims, maintaining that the dishonest assistance claims were time-barred, and that it could not be held liable for fraudulent trading as it had no role in managing the Bilta Companies.

The Court held that section 213 should be given its full breadth, capturing outsiders as well as insiders. However, it also ruled that dishonest assistance claims were time-barred. Under section 1032 Companies Act 2006, restored companies are treated as if they were never dissolved, meaning they are expected to act with reasonable diligence throughout. To rely on the fraud extension under section 32 Limitation Act 1980, claimants must show with strong evidence that fraud could not reasonably have been discovered earlier.

For insolvency practitioners, the case both widens the scope for recovery against third parties and reinforces the high evidential burden in overcoming limitation defences.

Key takeaways for insolvency practitioners from Bilta (UK) Ltd (in liquidation) v Tradition Financial Services Ltd

Third-party liability in fraudulent trading is real and wide-reaching

The court rejected arguments that liability under section 213 Insolvency Act 1986 is confined to directors or managers of the company. Instead, the wording of the statute was given its natural breadth: any person knowingly participating in a company’s fraudulent business can be held liable, whether or not they had a managerial role.

For insolvency practitioners, this opens up opportunities to pursue brokers, suppliers, or other intermediaries who play a knowing part in fraudulent activity.

Fraud discovery delays must be evidenced, not assumed

The judgement underscores that extensions under section 32 of the Limitation Act 1980 are not automatic. To benefit from the delayed start of the limited period, practitioners must show with robust evidence that the fraud could not reasonably have been discovered earlier.

The burden is firmly on the claimant. Courts will apply an objective standard of “reasonable diligence” and will not accept vague assertions that fraud was concealed.

Restored companies are treated as if they never dissolved

Under section 1032 Companies Act 2006, a restored company is treated as having existed continuously – even during dissolution. That means claimants cannot rely on a gap in corporate existence to argue that limitation should be paused.

Instead, courts will assess limitation on the basis that directors could have been in place throughout. Practitioners should therefore assume that dissolved periods will not assist in overcoming limitation hurdles.

The risk of time-barred claims is significant

In Bilta (UK) Ltd (in liquidation) v Tradition Financial Services Ltd, the dishonest assistance claims ultimately failed because the claimants could not show that the fraud was undiscoverable within the usual limitation period. This is a clear warning: without concrete evidence of why a fraud could not have been uncovered earlier, claims may be struck out as time-barred, even where wrongdoing appears clear.

Insolvency litigation funding options

Litigation funding, the assignment of claims and/or ATE insurance can play a pivotal role in assisting insolvency practitioners (IPs) in meeting their obligations. Insolvency practitioners involved in insolvency litigation can make use of the following methods:

After-the-event (ATE) legal insurance – ATE insurance is generally used to protect from adverse costs risks & Security for Costs requirements. After-the-event (ATE) legal expenses insurance is perhaps best thought as a similar to a ‘swap’. For either no upfront fee or a small upfront fee, the insurer takes on all of the risk of the potential adverse costs award.

The claimant has swapped their obligation to pay the defendants in the event of a loss, with the obligation to pay the insurer in the event of a win. This ‘swap’ is generally an attractive swap as the client is likely to be in a better financial position following a win than following a loss. Also, the payment to the insurer will only be a percentage of the adverse costs rather than the whole amount.

Third party litigation funding – In some cases, third party litigation funders may be willing to provide funding for a claim in exchange for a share of any financial settlement or damages awarded. This option can be attractive when there are no funds to pursue a strong case. ATE insurance is often used in conjunction with this type of funding.

Assignment of litigation – Some types of disputes can be assigned to a third party, usually for an upfront payment and a share of recoveries (after costs). This model can be useful on smaller cases when the ATE and CFA model would not deliver value. But giving up control can sometimes be costly, especially on larger disputes.

How can Annecto Legal assist?

When handling insolvency matters, insolvency practitioners are obligated to explore all options available in such cases. At Annecto Legal, we assist a wide range of clients in finding the appropriate insolvency litigation funding, assignment options and after-the-event (ATE) insurance.

Annecto Legal regularly assists licensed insolvency practitioners who are involved in dealing with fraudulent trading and insolvency matters. If you are in the process of bringing or defending an insolvency dispute and want to find out whether we can assist in helping you fulfil your obligations and secure the right deal, then contact Annecto Legal now.