Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (in administration): Tracing a way through the labyrinth

The recent judgment of Mr Justice Lewison in the case of Sinclair Investments (UK) Ltd v Versailles Trade Finance Ltd (in administration) [1] is one of many judgments arising out of the collapse of the Versailles group of companies a decade ago. Although an appeal is scheduled to be heard in December 2010, this first instance judgment is important for those working in the field of business crime, writes Yindi Gesinde of Baker & McKenzie, because it has far-reaching consequences for a victim’s ability to trace into property that has been misappropriated or obtained as a result of a breach of fiduciary duty.

Yindi Gesinde (+44 207 919 1057, yindi.gesinde@bakermckenzie.com) is an associate at Baker & McKenzie LLP www.bakermckenzie.com in London.

A very common fraud, which can lead to potentially significant losses, occurs when a company director artificially inflates the share price by massaging the company’s accounts. If the director also happens to have owned shares, a buyer who overpays for them has two principal options.