Glencore Energy UK Ltd v Prax Lindsey Oil Refinery Limited (in liquidation)

Under Insolvency Act 1986, leave to proceed after a winding-up should be granted where the proposed claim is genuinely arguable and raises a serious or substantial question, unless it is a provable debt more conveniently resolved in the liquidation. A claim asserting proprietary rights, including an arguable equitable right to rescind and trace, is ordinarily determined outside the proof process. Fact-sensitive bars such as partial rescission, affirmation, delay and tracing should not normally be finally determined on the leave application. The statutory insolvency trust does not plainly extinguish a pre-existing equity to rescind. Where no more convenient insolvency process is identified, granting leave is right and fair.

Glencore sought leave under section 130(2) of the Insolvency Act 1986 to commence and pursue a claim against PLOR, which was in compulsory liquidation.

The proposed claim sought equitable rescission of five crude-oil sales confirmations allegedly induced by fraudulent misrepresentations, together with tracing and proprietary relief. PLOR opposed the application on grounds concerning the effect of liquidation on rescission, partial rescission, affirmation and delay, and the alleged impossibility of tracing oil through the refining process.

The central questions were whether the claim was genuinely arguable and sufficiently substantial, and whether the dispute should instead be resolved through proof in the liquidation.

Disposition and reasoning

1. Leave to commence and proceed with the proposed claim was granted. Under section 130(2), the court should examine the merits only to determine whether the claim is genuinely arguable and raises a serious or substantial question. The purpose of the stay is orderly collective administration: Gardner v Lemma Europe Insurance Co Limited [2016] EWCA Civ 484. Where the claimant asserts rights to property rather than merely a debt, leave will normally be appropriate: In re Aro Co Ltd [1980] Ch 196.
2. Glencore’s argument that an equity to rescind is an inherent limitation binding on the transferred property, rather than merely a personal claim, was seriously arguable. The court did not finally determine whether the liquidation’s statutory trust displaced that equity. The broad proof provisions did not clearly convert a claim to rescind and trace into a liability to pay money or money’s worth.
3. Equitable rescission remains a court-granted remedy, and the contract remains effective until the order. Where fraud is established and no recognised bar applies, there is no general discretion to leave the transaction standing merely because damages might appear fairer. Partial rescission remained seriously arguable because the individual sales confirmations might constitute severable instalment bargains despite the overarching agreements: De Molestina v Ponton [2002] 1 All ER (Comm) 587; Trafigura Pte Ltd v Gupta [2026] EWHC 159 (Comm).
4. Affirmation and delay depended on disputed facts, including Glencore’s knowledge and conduct after liquidation, and could not properly be summarily determined. The same applied to tracing. Equitable tracing concerns the value represented by the original asset and its proceeds, not necessarily the identification of individual molecules. Mixing and chemical transformation created difficulty but did not make the claim unarguable: Foskett v McKeown [2001] 1 AC 102.
5. No more convenient proof or directions procedure was identified. The dispute was substantially proprietary and needed determination so that the estate could be wound up. It was therefore right and fair to grant leave.

not stated in the judgment.