GamlestadenFatigheter AB v Baltic Partners [2007] 4 All ER 164
Claimant, a company, was a shareholder in Defendant but also a creditors of Defendant.
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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.
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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.
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