SQN Global v Hughes: High Court finds fraudulent trading by Genesis haulage directors

The Insolvency and Companies Court has found four individuals liable for fraudulent trading after a haulage company's assets were systematically diverted away from creditors in breach of a worldwide freezing order, in a judgement following a disposal hearing at which none of the defendants appeared.

In SQN Global Ltd v Hughes & Ors [2026] EWHC 2056 (Ch), ICC Judge Mullen held that Marcus Hughes, his partner Tracy Greening, his brother David Hughes, and former employee Daniel Clarke were jointly and severally liable to contribute to the assets of Genesis (2014) UK Ltd under section 213 of the Insolvency Act 1986, having found each had been knowingly party to carrying on the company's business with intent to defraud its creditors.

Background

Genesis operated a haulage business until its operator's licence was revoked by the traffic commissioner in early 2021, a decision the commissioner accepted would likely put the company out of business. Marcus Hughes had earlier been required to step down as director in 2018 after failing to disclose criminal convictions, though the commissioner later found he had continued to exercise a significant managerial role behind the scenes.

Days after the licence revocation, SQN Global obtained a worldwide freezing order against the company in separate proceedings for unpaid invoices, later securing judgement against Marcus Hughes for over £6 million. Genesis was placed into compulsory liquidation in April 2022, with SQN's claim assigned to it and pursued through this fraudulent trading action after the defendants failed repeatedly to file defences and were ultimately debarred from defending.

Findings

The judge found that following service of the freezing order, substantial payments continued to be made from the company's accounts in excess of permitted trading expenses, while its remaining assets, including more than 100 trailers, were transferred to an associated company, Clarence Road Vehicle Services Ltd (CRVS), without adequate consideration. Emails showed David Hughes redirecting customer payments into CRVS's account or his own personal account after the company's bank account was frozen.

ICC Judge Mullen accepted that Marcus Hughes remained a de facto director throughout, continuing to control the company through Ms Greening and his brother despite his formal resignation, and that both Ms Greening and David Hughes were actively involved in diverting company assets and payments in defiance of the freezing order. Daniel Clarke, who was CRVS's sole director, was found to have dishonestly facilitated the transfer of assets to that company, though his liability was confined to the value of assets shown to have reached CRVS specifically.

The claim failed against two defendants. Nicholas Plant, an accountant alleged to have received hire income through a separate company, escaped liability on the basis that the evidence linking him to the arrangement, largely hearsay from a third party who did not give evidence, was insufficient. Helen Walker, who resigned as director the day after the freezing order was served, was found to have had no established continuing involvement in the company's management thereafter.

The judge declined to accept several categories of alleged losses, including assets identified only through social media posts and an unverified email from a family member, on the basis the evidence fell short of the standard required, and fixed the starting date for recoverable losses from the effective date of service of the freezing order rather than the date pleaded by the claimant.

A further hearing has been listed to determine the precise value of Mr Clarke's contribution, along with interest and costs.