Glencore v Prax Lindsey Oil Refinery: High Court doubts Crown Holdings on rescission in liquidation

The High Court has found it seriously arguable that a supplier defrauded before a company's liquidation can still rescind in equity afterwards and trace into the company's assets, casting doubt on the 2015 decision in Crown Holdings.

In Glencore Energy UK Ltd v Prax Lindsey Oil Refinery Ltd (in liquidation) [2026] EWHC 2394 (Ch), Mr Justice Trower considered Glencore's application under section 130(2) of the Insolvency Act 1986 for leave to sue the refinery company, which was wound up on 30 June 2025. Edward Cumming KC and Erin Hitchens appeared for Glencore, and Joseph Curl KC and Clara Johnson for the company.

Glencore seeks equitable rescission of five sales confirmations for crude oil worth more than US$230 million, an account of profits and a declaration that the oil or its proceeds are held on trust. It alleges the confirmations were induced by fraudulent misrepresentations, said to arise from a securitisation fraud alleged by other group companies against the company's former sole director. Those allegations are disputed. If it succeeded, publicly funded wind-down costs would face a significant shortfall and HMRC would receive nothing.

The judge said the court should not investigate the merits beyond whether a claim is genuinely arguable and raises a sufficiently serious question. Where a claim is a provable debt, leave is unlikely if proof in the liquidation is more convenient, but that carries less weight where a claimant asserts an equitable proprietary interest.

The company advanced four grounds for refusing leave, any of which would make rescission unavailable. The first relied on Crown Holdings, where Murray Rosen QC held that an equity to rescind for pre-liquidation fraud could not be exercised once liquidation had begun, because the assets were held on the statutory trust for creditors. The company said it should be followed unless shown to be wrong. The decision has drawn academic criticism, and the judge found real substance in Glencore's challenge. The equity to rescind, he said, is not a mere personal right but an inherent limitation on the transferee's interest, an aspect Crown Holdings did not address. He also doubted the distinction drawn from section 283(5) between bankruptcy and liquidation, and read the bankruptcy authorities of Eastgate and Tilley v Bowman as consistent with rescission surviving insolvency. Rimer J's contrary observations in Shalson v Russo were obiter and made without examining the point.

He also rejected the argument that the single cut-off date and the width of provable debts defeated the claim, since the right to rescind was not obviously a liability to pay money or money's worth. It was seriously arguable, he concluded, that a trial court would find Crown Holdings wrong.

On partial rescission, it was seriously arguable that each confirmation was a severable contract under the umbrella framework and supply agreements, so that rescinding five did not require rescinding the rest. The US$40 million processing fee Glencore obtained when it agreed a July 2025 term sheet that kept the refinery operating went to restitutio in integrum, not to whether rescission was available.

On affirmation, the judge accepted that Glencore's agreement to the term sheet and its delay until December 2025 may well prove an affirmation, but the issue was too fact sensitive for summary determination, particularly as the oil had been refined before Glencore learned of the alleged fraud in August 2025.

Tracing through the refining process would be difficult, but Glencore had a seriously arguable case of tracing into some property still held.

In the judgement, he concluded that these findings went most of the way towards granting leave.