The Supreme Court delivered the first ever ruling on the Fraudulent and Insolvent Trading provisions of the Insolvency Act 2011. Please click here to view the judgment.

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Nick Cruz, assisted by Kayleigh-Anne Revagliatte, of Ellul & Cruz have set a precedent by obtaining the first judgment in Gibraltar using provisions of the Insolvency Act 2011 such as fraudulent and insolvent trading. Ellul & Cruz were assisted by Mr Daniel Lewis of Wilberforce Chambers in London.

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The firm represented the Liquidators, Mr Edgar Lavarello of PwC Gibraltar and Mr Simon Conway of PwC Cayman Islands, in the matter of Kijani Resources Limited (in Liquidation) and Ratio Limited (in Liquidation) v Fagan & Others [2016/COMP/004 and 2021/COMP/009]; [2025] GSC 003.

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The Supreme Court, presided by the Honourable Mr Justice Yeats, Puisne Judge, ruled against Mr Richard Fagan, one of the founders of the ‘Kijani Funds’. Mr Faganwas found liable for fraudulent trading, insolvent trading, misfeasance and finally, was held to be a knowing party to the carrying on of the business of Kijani Resources Limited and Ratio Limited with intent to defraud creditors and for a fraudulent purpose.

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The Judge found that investor funds had been intentionally diverted to entities controlled by Mr Fagan and his associates for personal enrichment, including the purchase of yachts and other extravagant items of expenditure.

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The Court determined that Mr Fagan had knowingly misled investors by grossly overstating asset values and presenting a false picture of financial stability,while in reality, the funds were being dissipated through multiple layers of related entities, with little or no real substance and was, in effect, a mechanism for the fraudulent dissipation of investor capital. This landmark judgment establishes an important precedent in Gibraltar’s insolvency jurisprudence on director’s liabilities and their scope.

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The Court awarded £61,987,273.421 under the judgment with an additional  £56,983,470.41 owed for interest due under the judgment debt, totalling £118,970,743.83.

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Nick Cruz, Head of Litigation at Ellul & Cruz, commented that the decision sends an unequivocal message: Gibraltar will not tolerate financial misconduct. The Court’s approach to Fagan’s obstructionism, coupled with the award of punitive interest and indemnity costs, makes clear that those who engage in fraud will be held to account.

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Marc X. Ellul, the Managing Director of Ellul & Cruz and Director of Corporate added the mandatory accounting order eases further recoveries for creditors and reinforces the jurisdictions commitment to strict enforcement of high corporate governance standards and investor protection.

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About Ellul & Cruz

Ellul & Cruz is a leading Gibraltar law firm which traces its history to over 50 years ago. It has over 30 years’ experience in commercial litigation and in particular, complex cross-border insolvency matters. In this matter, the firm worked closely with PwC’s global restructuring practice and London-based Wilberforce Chambers to achieve this historic outcome.

For media enquiries or further information, please contact: marc@ellulcruz.com