High Court finds an insolvent company’s IP was transferred at an undervalue and to prejudice creditors
Garden House Software has been at the centre of a High Court ruling finding that intellectual property belonging to an insolvent company was transferred at an undervalue and for a purpose that included putting the asset beyond creditors’ reach.
Mr Justice Fancourt handed down judgment on 18 August 2026 in Garden House Software Limited v Timothy John Marsh & Ors [2026] EWHC 2184 (Ch). The case concerned the assignment of intellectual property, including the development of Adypt software, by Serisys Limited to Serisys Asset Holding Limited (SAHL) on 30 August 2017.
Garden House Software Limited (GHSL), which had acquired the claims of Serisys Limited’s liquidator, argued that the assignment was a transaction at an undervalue, a transaction defrauding creditors and a breach of directors’ duties.
The court found that the company’s IP had substantial value. In particular, the part of Adypt known as the Engine had independent value and could be licensed separately. The defendants’ argument that the company’s IP was effectively worthless was rejected.
The court also found that Serisys Limited was unable to pay its debts when the assignment took place. The judgment records that its current liabilities stood at about US$481,201 at the end of August 2017, while it had only US$17,239 in cash.
The key consequence for directors is the court’s finding that creditor interests had to be considered once the company was insolvent. Mr Marsh and Mr Rowland were found to have breached their duties under sections 172 and 174 of the Companies Act 2006 by failing to consider creditors’ interests, assigning the IP for no value and continuing to have the company provide development services for the benefit of SAHL and SGL without payment.
The court rejected an argument that the directors should be relieved from liability under section 1157 of the Companies Act 2006. It found that the assignment was intended principally to protect the IP from the possible consequences of the company’s insolvency, rather than being necessary to unlock licensing income.
The judgment also considered security granted over the Adypt IP to Pamela Ball in 2019 and 2026. The court found that the 2019 security arrangement was a transaction at an undervalue and a transaction defrauding creditors under section 423 of the Insolvency Act 1986. It reached the same conclusions regarding the 2026 security arrangement.
The court further found that the 2026 security was no impediment to granting relief to GHSL. Under section 241 of the Insolvency Act 1986, Ms Ball’s interest could be affected because she was connected with SAHL, and the court found that the relevant statutory presumption against good faith applied.
Rather than order the IP itself to be transferred, the court concluded that monetary relief was the more appropriate remedy. It found that identifying precisely which parts of Adypt comprised the company’s IP would create uncertainty and could lead to further litigation.
Mr Marsh, Mr Rowland and SAHL were ordered to pay £2,034,000, representing the full value of AdyptUK on 30 August 2017. The judgment states that the remedies for the successful claims are non-cumulative. Security was also ordered over Adypt, with Ms Ball’s interest under the 2026 security agreement postponed to GHSL’s interest.
For solicitors advising company directors, the judgment underlines the importance of addressing creditor interests where insolvency has arisen, obtaining appropriate advice and valuation evidence before transferring valuable corporate assets, and ensuring that transactions involving connected companies are properly scrutinised.