Re Sarflax Ltd

Re Sarflax Ltd Ch 592; 1 All E.R. 529 is a UK insolvency law case concerning voidable preferences and fraudulent trading, now in the Insolvency Act 1986. It concerns the definition of "intention to defraud", which is found in a number of legal provisions.

Facts

Sarflax Ltd was in liquidation. It incurred another debt after a judgment that it had delivered unsatisfactory goods. The liquidator moved for a declaration that the delivery of these unsatisfactory goods was evidence of fraudulent trading. It also argued Sarflax had preferred other creditors over the, knowing it was unable to pay its debts in full.

Judgment

Oliver J held that "intention to defraud" in the voidable preference section did not cover a case where a debtor merely knew or had grounds to think he had no sufficient funds to pay creditors in full.