Largest ever divorce case contributes to rapidly growing area of insolvency law

Largest ever divorce case contributes to rapidly growing area of insolvency law

Executive Summary

A recent judgment of the Family Court has demonstrated the breadth and effectiveness of bringing a claim under s.423 of the Insolvency Act 1986. The judgment is the latest in what has been described in the press as “the most expensive family feud in history

Points of particular interest arising from the judgment:

  1. the court noted that there is no requirement under s.423 that a creditor must prove that a debtor had insufficient assets following the transaction concerned to satisfy the liabilities owed to the creditor; and
  2. confirmation that s.423 can be used even where the debtor’s assets are held outside of England and Wales (a claimant must only prove there is a ‘sufficient connection’).

When considered in conjunction with the decision in Seaquana1 (that a payment by a company to its shareholders of an otherwise lawful dividend can be subject to a s. 423 claim) creditors and prospective claimants would be well advised to consider the benefits of a claim under s.423.


In April of 2021 the Family Division of the High Court gave judgment in the case of Akhmedova v Akhmedov and others [2021] EWHC 545 (Fam) (Akhmedova), which concerned, in the words of Knowles J “one of the unhappiest [families] ever to have appeared in my courtroom”

In 2016 Tatiana Akhmedova (T) was awarded almost £454m by the High Court following divorce proceedings against her ex-husband, Farkhad Akhmedova (F). Around the time of that judgment F entered into a number of schemes and transactions, which were designed to transfer “every penny” out of his own name, and thus beyond the reach of enforcement against the 2016 judgment. T subsequently brought enforcement proceedings against F, and the transferees of the assets, being her son, a Cypriot company and the trustees of several trusts.
T sought to set aside various transfers (of both cash and property) on the basis that they were transactions defrauding creditors under s.423.

S. 423 Insolvency Act 1986

S. 423 permits the court to set aside certain transactions in circumstances in which a debtor has entered into that transaction at an undervalue with the intention of putting assets beyond the reach of creditors.

Financial Standing of the Debtor

While it is accepted that there is no requirement under s. 423 that a defendant be insolvent, the defendants in Akhmedova sought to argue that a condition of a successful claim was that the defendant had insufficient assets following the transaction to meet the liability owed.

The court rejected this argument, holding that the imposition of such a condition was not within Parliament’s intention and therefore should not be read into the wording of the section (following the reasoning in Ablyazov2). The court further held that imposing such a condition would unduly prejudice creditors’ interests.

Extra-Territorial Effect

In Akhmedova, included amongst the defendants were the trustees of certain Liechtenstein trusts who had received assets via a nominee in Switzerland. The trustees argued that T did not have sufficient standing to challenge the transfers because she had failed to enforce the orders against the assets in Switzerland and therefore did not suffer prejudice when they were transferred to Liechtenstein.

The court rejected this argument, holding that the transactions were made with the prohibited purpose, and it was not therefore necessary to prove that enforcement had become more difficult.

The court held that s.423 can be used even in circumstances where a debtor and/or their assets are held outside of England and Wales. The claimant need only prove that there is a sufficient connection to the jurisdiction.

Subsequent Transfers

The court further held, building on the judgment in Arden3, that any subsequent transferees of the assets will also be liable under s. 423 unless they can show that they received the assets in good faith, for value, and without notice of the relevant circumstances4.


Akhmedova is the latest case to expand the breadth of claims under s. 423. The case will no doubt be of particular interest to victims of fraudulent transfers and claimants seeking to enforce against assets held in offshore structures.

1BTI 2014 LLC v Sequana SA [2019] EQCA Civ 112
2JSC BTA Bank v Ablyazov [2018] EWCA Civ 116
3Johnson v Arden [2018] EWHC 1624 (Ch)
4S.425(2)(b) Insolvency Act 1986