In Glencore Energy UK Ltd v Prax Lindsey Oil Refinery Ltd (in liquidation) [2026] EWHC 2394 (Ch), the High Court granted permission under s 130(2) Insolvency Act 1986 to bring a claim for equitable rescission against a company in compulsory liquidation.
Prax Lindsey Oil Refinery Ltd (Prax) owned and operated an oil refinery in Lincolnshire. One of its main suppliers of crude oil was Glencore Energy UK Ltd (Glencore).
After Prax entered compulsory liquidation, Glencore alleged that it had been induced by fraudulent misrepresentation to enter into certain contracts for the supply of crude oil with Prax and was entitled to equitable rescission of them. However, due to the stay on legal proceedings against a company in compulsory liquidation imposed by s 130(2), Glencore required the court's permission to commence its claim.
The court granted Glencore permission to proceed. It was satisfied that Glencore's claim to rescind the supply contracts was sufficiently serious and substantial, and that it could not be resolved instead by Glencore proving in the liquidation (see Distribution of assets in insolvency, Q&A here). As to Prax's principal objections, Trower J held it was seriously arguable that:
- a claim against a company for equitable rescission survives liquidation, and Re Crown Holdings (London) Ltd (in liquidation) [2015] EWHC 1876 (Ch) was therefore wrongly decided. A claimant's equitable right to rescind is binding on the title of the asset transferred as a result of the misrepresentation, which is an inherent limitation on the interest acquired by the misrepresentor; and
- Glencore could trace its crude oil into Prax's refined oil products, despite the mixing of assets and chemical transformation. Applying Foskett v McKeown [2001] 1 AC 102 (House of Lords), equitable tracing did not follow the physical asset, but the value attributable to it.
First published on the R&I News Service on 9 October 2026
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