The recent decision in Thomas & Anor v Jones & Anor [2025] EWHC 756 (Ch) is a significant development for insolvency practitioners, particularly those pursuing claims under section 423 of the Insolvency Act 1986. The case not only illustrates the evidential challenges in proving that a debtor acted with the prohibited purpose of defeating creditors but also applies and reinforces key legal principles clarified by the Court of Appeal in Purkiss v Kennedy.

Litigation finance, funding arrangements and insurance allow insolvency practitioners to pursue claims on behalf of their clients whilst reducing financial risks. At Annecto Legal, we can assist clients by helping them secure funding and insurance for insolvency cases.

Thomas & Anor v Jones & Anor [2025] v Jones & Anor

A bankruptcy order was made against Mr Rai Hamilton on 23 October 2019, following a dispute with his former friend and business associate, John Jones. This occurred despite Mr Hamilton holding a judgement against Mr Jones; the petitioning creditor was a firm of solicitors. Ed Thomas and Matthew Carter of Fovis Mazars were appointed as trustees in bankruptcy.

Acting as trustees of Mr Hamilton’s estate, they brought proceedings against John Jones and his son, Adam, under section 423 of the Insolvency Act 1986. They challenged two sets of transactions: (1) a £3 million gift from John to Adam, used to buy property and make loans to Adam’s sister; and (2) a series of miscellaneous payments made between June 2016 and January 2019.

In Thomas & Anor v Jones & Anor [2025] EWHC 756 (Ch), ICC Judge Prentis applied legal principles recently clarified by the Court of Appeal in Re Ethos Solutions Ltd; Purkiss v Kennedy, influenced by the Supreme Court’s decision in El-Husseiny v Invest Bank PSC. Key propositions included that the debtor’s subjective purpose is central under s 423, and that the court may infer improper intent even where multiple purposes existed or where the transaction was advised by lawyers.

The judge undertook detailed fact-finding, reviewing the deed of gift and prior litigation. He concluded that the £3 million gift was made with the intention of placing assets beyond Mr Hamilton’s reach, and the trustees succeeded on that claim. However, the claim relating to miscellaneous payments failed, as the transactions lacked the necessary connection to any creditor-defeating purpose.

The judgement also included a strong judicial character assessment of John Jones, who had previously been sentenced for contempt. He was described as intelligent and persuasive but ultimately unreliable, constructing narratives around incomplete facts and speculative transactions.

This case reinforces that s 423 remains a potent but fact-sensitive remedy for insolvency practitioners.

Why is this case important for insolvency practitioners?

The case of Thomas & Anor v Jones & Anor [2025] EWHC 756 (Ch) holds significant value for insolvency practitioners, particularly in how it clarifies and reinforces the legal principles governing claims under section 423 of the Insolvency Act 1986.

One of the most important aspects of the case is its emphasis on the subjective nature of the debtor’s purpose in entering into a transaction. The court reiterated that what matters is not what a reasonable person might have intended, but the debtor’s actual purpose.

This subjective test is central to the application of section 423, and the judgment affirms that where a debtor has multiple purposes in undertaking a transaction, it is sufficient for the improper purpose to be merely one of them. There is no need for it to be dominant or exclusive. This interpretation gives insolvency practitioners a clearer and more workable legal standard when assessing whether a transaction was intended to defeat creditors.

The judgment also underscores that the existence of legal or professional advice does not immunise a transaction from challenge under section 423. Even if a debtor believed a transaction to be lawful, it may still fall foul of the statute if it was carried out for the purpose of putting assets beyond the reach of creditors or prejudicing their interests.

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 claim 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 insolvency and s 423 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.