Sevilleja v Marex Financial Ltd [2020] UKSC 31

Court: Supreme Court

Facts: After a confidential draft judgment ordered Sevilleja’s companies to pay Marex Financial Ltd, Sevilleja transferred the company’s assets offshore. Marex, a creditor of the company, sued Sevilleja for asset-stripping, alleging that the transfer was done to avoid paying the debt.

Issue: Can Marex sue Sevilleja for asset-stripping despite the no reflective loss rule?

Held: Yes, Marex can pursue the claim. The Supreme Court held that the no reflective loss principle applies only to shareholders, not to creditors. Therefore, Marex, as a creditor, could sue for losses resulting from Sevilleja’s wrongful acts.

Key Judicial Statement: Lord Reed stated, "The no reflective loss rule distinguishes between losses suffered in a shareholder’s capacity and other losses. Claims by creditors, even where the company’s loss also results in their own loss, do not fall within the reflective loss rule."

💡LevelUpLaw: The no reflective loss principle prevents shareholders from suing for losses that reflect the company's losses. However, this rule does not apply to creditors, who can pursue claims for losses directly suffered due to wrongful acts, such as asset-stripping, even when those acts also harm the company.