El-Husseiny v Invest Bank PSC: Supreme Court ruling on creditor rights

On 19 February 2025, the Supreme Court dismissed the appeal in El-Husseiny and another v Invest Bank PSC, a significant case concerning asset recovery and creditor protection. The case involved Invest Bank PSC, a UAE-based public shareholding company, which sued Ahmad Mohammad El-Husseini over alleged guarantees for loans given to UAE companies.

Invest Bank obtained judgments against El-Husseini in Abu Dhabi and sought to enforce them against assets in the UK. Among these assets was valuable property in London, which Invest Bank alleged had been transferred to put it beyond its reach. The bank argued that these transactions fell within the scope of section 423 of the Insolvency Act 1986, which allows courts to set aside transactions entered into at an undervalue with the intention of prejudicing creditors.

The central question before the courts was whether a debtor could be said to have “entered into” a transaction under section 423 if they had arranged for a company they controlled to transfer assets, rather than transferring them directly. The Supreme Court’s decision provides important clarification for creditors, debtors, and insolvency practitioners.

Legal questions before the Supreme Court

The Supreme Court examined two crucial legal issues:

• Can a person “enter into” a transaction under section 423 when acting on behalf of a company? The Court considered whether a debtor, acting as the controlling shareholder of a company, could be held responsible for a transaction where the company transferred assets at an undervalue. 
• Can a “transaction” under section 423 involve assets not legally or beneficially owned by the debtor? The Court assessed whether section 423 applied where a debtor arranged for a company they owned to transfer assets, even though the debtor did not personally own them. 

The transaction in question

To determine the scope of the law, the Supreme Court examined a key transaction: the transfer of a valuable London property. Marquee Holdings Limited, fully owned by El-Husseini, who allegedly transferred the property to his son for free.

This transfer effectively eliminated the value of Marquee’s shares. While El-Husseini remained the company’s owner, the company no longer held the valuable asset. As a result, Invest Bank could no longer enforce its judgment by targeting his shareholding in Marquee.

Invest Bank argued that section 423 should apply because El-Husseini had orchestrated the transaction in a way that reduced the value of assets available to creditors. El-Husseini and his co-appellants challenged this interpretation, arguing that section 423 did not apply to transactions made through a company rather than directly by the debtor.

The Supreme Court’s ruling

The Supreme Court unanimously dismissed the appeal, confirming that section 423 applies to transactions where a debtor causes a company, they control to transfer assets at an undervalue.

The ruling clarified that:

• A debtor does not have to personally own an asset for Section 423 to apply. If a debtor arranges for a company they control to transfer assets at an undervalue, the transaction can still be challenged under section 423.
• A debtor can “enter into” a transaction even when acting on behalf of a company. If a debtor directs or procures a company to make a transfer, the debtor can be held responsible for that transaction under section 423.
• The purpose of section 423 is to prevent transactions designed to prejudice creditors. The Court reinforced that section 423 is a crucial tool for creditors seeking to recover assets transferred in bad faith.

The decision confirms that creditors are not restricted to challenging transactions made directly by a debtor. They can also contest those where a debtor uses a company to shield assets from enforcement.

Implications for creditors and debtors

Stronger protections for creditors

The Supreme Court’s ruling strengthens creditor protection by ensuring that individuals cannot use corporate structures to shield assets from enforcement. It confirms that creditors can challenge cases where debtors use a company to transfer assets below their value, preventing them from avoiding liability. The decision reinforces section 423 as a key tool for debt recovery, particularly in complex cases where debtors attempt to disguise asset transfers.

Increased risks for debtors attempting to shield assets

For debtors, this judgment removes a potential loophole. Some individuals have sought to protect assets from creditors by transferring them through companies they own while retaining control of the corporate entity. The Supreme Court has clarified that such strategies will not withstand legal scrutiny under UK insolvency law.

Debtors must now exercise caution, as asset transfers intended to evade creditors can be challenged under section 423.

Impact on insolvency practitioners

The Supreme Court also confirmed that its broad interpretation of “transaction” under section 423 would apply to other key insolvency provisions:

• Section 238 of the Insolvency Act 1986, which applies to transactions at an undervalue when a company enters administration or liquidation.
• Section 339 of the Insolvency Act 1986, which applies to transactions at an undervalue in cases of personal bankruptcy.

This means insolvency practitioners can use multiple legal routes to challenge transactions where assets have been transferred in ways that undermine creditor claims.

Clarifying the law on asset transfers

This ruling establishes a clear precedent for debt recovery cases. It strongly conveys that UK courts will not allow debtors to manipulate corporate structures to avoid creditor enforcement.

For creditors, the decision provides greater confidence that courts will support their efforts to recover assets lost through suspect transactions. It ensures that section 423 remains an effective tool against deceptive asset transfers.

A crucial precedent for insolvency law

The Supreme Court’s decision in El-Husseiny and another v Invest Bank PSC reinforces creditor protection by confirming that section 423 applies to transactions where debtors use companies to transfer assets at an undervalue. This ruling clarifies the law on asset recovery, preventing individuals from shielding assets through corporate structures.

For creditors, it strengthens their ability to challenge transactions that undermine debt enforcement. For debtors, it is a clear warning that such tactics will not hold up in court.

At Lincoln & Rowe we understand the importance of helping our clients keep their businesses running smoothly. As well as in-depth commercial expertise we provide an excellent service to our clients and practical advice and guidance.

We have wide-ranging experience in litigation and corporate law and were named as winners of the Global 100 for Best Firm for Commercial Disputes of the Year 2025 and Gamechangers Global Awards for Commercial Litigation Law Firm of the Year in the United Kingdom 2025.

If you would like to talk to one of our expert legal team about any queries you may have, contact the author, Dipesh Dosani, or call the team today on 020 3968 6030 and we’ll be happy to help.

The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor.

The above information is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a legal advisor.