Glencore Energy UK Ltd v Prax Lindsey Oil Refinery Limited (in liquidation)
| Court | High Court of Justice, Business and Property Courts of England and Wales, Insolvency and Companies List (ChD) |
| Judge | Mr Justice Trower |
| Judgment | 21 September 2026 |
| Hearing | 28 and 29 July 2026 |
| Jurisdiction | England and Wales |
| Applicant | Glencore Energy UK Ltd, sole supplier of crude oil to the refinery |
| Respondent | Prax Lindsey Oil Refinery Limited (in liquidation), the refinery operator, with the Official Receiver as liquidator |
| Case reference | CR-2025-004409 |
Summary
Glencore supplied crude oil to the North Killingholme refinery under five sales confirmations dated between 1 April and 7 May 2025 and was not paid. The refinery company went into compulsory liquidation on 30 June 2025. Glencore says the five contracts were induced by fraudulent misrepresentations about the company's solvency, and wants them rescinded so that it can trace into the refined product ahead of the other creditors.
A company in liquidation cannot be sued without leave under section 130(2) of the Insolvency Act 1986. The liquidator opposed leave on four grounds, each said to make the claim futile. Mr Justice Trower held that each ground raises a serious question for trial and granted leave. He did not decide the claim.
Background and facts
The supply chain was built around title. Glencore sold crude to the refinery company at the Immingham terminal, bought it back as it entered segregated tanks at the refinery, and sold it again when it was drawn off for refining. Solvency and compliance representations were repeated on the first day of every month. Glencore also held a floating charge over the company's refined product and other feedstocks in store.
On 3 July 2025 the special managers assisting the liquidator agreed a term sheet to keep the refinery running. The company bought the crude still in the tanks for US$314 million and paid a processing fee of US$40 million, and Glencore consented to the sale of the refined product. The oil already drawn off, on which Glencore says US$236,158,785.56 is unpaid, was not covered. All the crude had been processed in some way by 9 August 2025.
The fraud alleged is that fictitious invoices were fed into the group's receivables facility. Glencore says it learned of it on 28 August 2025. The allegations have not been tried. On the liquidator's view, public funding advanced for the wind down ranks ahead of Glencore's floating charge, so a proprietary claim that succeeds comes out of what the government and HMRC would otherwise recover.
The issue
The liquidator relied first on Crown Holdings (London) Ltd (in liquidation) [2015] EWHC 1876 (Ch), decided by Murray Rosen QC, which held that the equity to rescind for fraud is a personal right that does not survive liquidation, because the assets are then held on the statutory trust for creditors. It also said Glencore could not rescind five confirmations and keep the framework agreements, that it had affirmed the contracts by dealing with the liquidator, and that crude refined in a continuous process cannot be traced.
Glencore said Crown Holdings was wrong, relying on bankruptcy cases in which a defrauded vendor recovered goods after the act of bankruptcy, and that a proprietary claim cannot be dealt with by proof of debt.
The decision
The judge did not accept that the analogy Glencore drew with a claim for specific performance was complete.
Unlike a claimant with a right to specific performance, a person with a claim to rescind for fraudulent misrepresentation is not treated as the owner in equity of the property to which its claim extends until such time as the exercise of its right to rescind takes effect.Trower J, paragraph 41
That did not end it. The equity is not a mere personal right either. It is an imperfection in the buyer's title, binding on the property transferred, and Crown Holdings never examined that aspect. The judge was very doubtful that section 283(5) of the Act, which applies only in bankruptcy, justifies treating a liquidation differently. He also doubted that the claim to rescind is a liability to pay money or money's worth capable of proof.
Having regard to those considerations, I think that it is open to the court at any trial to conclude that it is clear that Mr Rosen was wrong in the approach he adopted in Crown Holdings.Trower J, paragraph 116
On partial rescission, it is seriously arguable that each confirmation was a severable contract for a separate cargo under umbrella agreements. The US$40 million processing fee goes to counter restitution and affirmation at trial. On affirmation, the judge accepted that the term sheet and Glencore's delay until December 2025 may well amount to affirmation, but the crude had been refined before Glencore says it knew of the fraud.
However, in my view this is one of those issues which will prove to be very fact sensitive and is not susceptible to summary determination on an application under section 130.Trower J, paragraph 155
On tracing, Glencore argued that equity follows the value inherent in the asset, not the physical oil. The judge held that it has a seriously arguable case that it can trace into some of the property still held by the liquidator. No more convenient route than an action was identified, so leave was granted.
Practical implications
Crown Holdings has not been overruled, but a High Court judge has now held, after full argument, that it is seriously arguable that it is wrong. A supplier to a contractor that fails after obtaining credit by false statements about its finances has an argued route to a proprietary claim outside the pari passu distribution. Liquidators should expect applications for leave rather than proofs of debt.
The route is narrow. Dealing with the office holder, consenting to sales of the goods or waiting months before electing to rescind all feed an affirmation argument. Goods mixed into a process leave the supplier to prove value into specific assets.
Practice points
- Take solvency and compliance representations in the supply contract and have them repeated with each order or on fixed dates. A claim in fraud needs a representation to point at.
- Structure call off orders as separate contracts for separate deliveries under an umbrella agreement. Severability is what lets Glencore argue for rescission of five contracts while leaving the rest in place.
- When a customer fails and fraud is suspected, investigate fast and elect to rescind in clear terms. An equivocal letter reserving all options gives the other side a delay and affirmation argument.
- Any deal struck with a liquidator or administrator to keep a project or plant running should reserve rights to rescind and to trace in express words.
- Keep delivery, storage and processing records that allow value to be followed into finished work or product. Without them a proprietary claim is exposed on tracing whatever the law on rescission turns out to be.
- Consider an express contractual right to call for revesting of goods on discovery that a representation was fraudulent. The judge's reasoning suggests insolvency law would not strike it down, though the point was not decided.