Introduction

The High Court’s recent appeal decision in Lyons v Bridging Finance Inc (acting by its receiver/manager PricewaterhouseCoopers Inc) [2026] EWHC 1388 (Ch), is a noteworthy reminder of the broad reach of English insolvency law. 

The appeal Judge considered the circumstances in which a debtor domiciled, and resident, abroad could be made bankrupt in England, providing a detailed analysis of what may amount to “carrying on business” for the purposes of section 265 of the Insolvency Act 1986.  His judgment reflects that debtors who have lived overseas for many years may nevertheless find themselves subject to English bankruptcy proceedings where their activities retain a sufficient connection with England and Wales.  

The decision will be of particular interest to creditors seeking to pursue internationally mobile debtors, as it confirms the Court’s willingness to look beyond formal labels and examine the commercial reality of a debtor’s activities when determining whether the jurisdictional gateway has been satisfied.

The Parties

Bridging Finance Inc (“BFI”), a Canadian lender in receivership, brought a bankruptcy petition against Anthony Lyons in respect of a debt of approximately CAD $39 million arising under a personal guarantee. Although Lyons had emigrated from the UK in 2010 and argued that the English courts lacked jurisdiction, BFI contended that he had continued to carry on business in England through property-related activities undertaken during the relevant statutory period. The dispute therefore centred on whether those activities were sufficient to bring Lyons within the ambit of section 265 despite his long-standing residence overseas.

Background

BFI had advanced CAD $36 million to a company beneficially owned by Lyons to fund the acquisition of a senior loan connected with the Dissington Garden Village development in Northumberland. Lyons personally guaranteed the borrowing. When the debt was not repaid, BFI served a statutory demand and subsequently presented a bankruptcy petition.

To establish jurisdiction under section 265 of the Insolvency Act 1986, BFI contended that Lyons had carried on business in England and Wales during the three years preceding the presentation of the petition. BFI relied on two alternative bases:

1. That Lyons conducted business through a network of more than 30 UK companies under his control; and
2. That he carried on business through the ownership, redevelopment, letting and eventual sale of a London property known as Hamilton Terrace.

At first instance, the Court rejected the corporate structure argument but held that Lyons’ activities in relation to Hamilton Terrace constituted a business for the purposes of section 265. A bankruptcy order was therefore made, and Lyons appealed.

When does property ownership become a business?

The principal issue on appeal was whether Lyons’ activities in relation to Hamilton Terrace amounted to “carrying on business” within the meaning of section 265.

Lyons had owned Hamilton Terrace personally for many years. During that period, the property was extensively redeveloped, let to third parties, managed through agents and ultimately sold for approximately £26 million in March 2022. The property also generated significant rental income while let.

Lyons argued that Hamilton Terrace was no more than a long-term investment. Any letting activity, he contended, was incidental and designed to preserve the property’s value and marketability pending its eventual sale.

The Court disagreed.

Rajah J reaffirmed the approach adopted in Durkan v Jones [2023] EWHC 1359, that in the absence of a statutory definition, “carrying on business” should be given its natural meaning. Drawing on existing authorities, the Court emphasised that the enquiry is highly fact sensitive and turns on the substance of a debtor’s activities rather than labels, structures, or formal descriptions. As the judgment in Jones v Aston Risk Management [2024] EWHC 2553 demonstrates, whether a person has “carried on business” depends on the substance of their own commercial activities rather than merely their status as a director or shareholder of a company. In an appropriate case, however, even a single transaction may amount to a business where it resembles a commercial enterprise.

Applying those principles, Rajah J concluded that Lyon’s involvement with Hamilton Terrace was not simply a passive investment. Viewed in the round, the acquisition, redevelopment, letting and eventual sale of the property formed a constituted and coherent profit-making venture bearing all the hallmarks of a property development business.

The Court therefore held that Lyons had carried on business through the Hamilton Terrace venture. That business continued during the relevant statutory period because the property continued to be let and was ultimately sold within that timeframe.

Rejected corporate structure argument

The Court also considered briefly BFI’s cross-appeal on the question as to whether Lyons was carrying on a separate personal business through his extensive network of UK companies. BFI had lost on this point at first instance.

BFI relied on  Re Brauch (A Debtor) ex p Britannic Securities & Investments Ltd [1978] Ch 316, in which the Court of Appeal recognised that, in certain circumstances, an individual may carry on business through a corporate structure if the companies operate as the vehicle through which the individual’s own business activities are conducted.

Rajah J accepted that there were noteworthy parallels between Lyons’ affairs and those considered in Re Brauch, particularly both debtors’ use of multiple companies in connection with property investments. However, the evidence did not establish that Lyons was conducting a sufficiently distinct personal business separate from the activities of the companies themselves.

The Court therefore declined to find jurisdiction on that basis. Instead, the jurisdictional gateway under section 265 was satisfied by Lyons’ activities in relation to Hamilton Terrace.

Jurisdiction and foreign debtors

 As set out above, the fact that Lyons had been resident in the Bahamas for many years was not, in itself, determinative as to whether jurisdiction had been established.

The Court separately considered whether it should exercise its bankruptcy jurisdiction over Mr Lyons, given his longstanding foreign residence. Consistent with earlier authorities, the Court focussed on whether there was a sufficiently close connection with England and whether a bankruptcy order would confer a measurable benefit upon creditors.

Lyons argued that even if jurisdiction was established, the Court should apply its discretion and decide not exercise jurisdiction over a foreign debtor. Relying on JSC Bank of Moscow v Kekhman [2015] EWHC 396 (Ch) and Stocznia Gdanska SA v Latreefers Inc (No 2) [2001] 2 BCLC 116, Rajah J rejected that submission. The Judge held that continuing links between Lyons’ UK property activities and corporate interests, together with the potential investigatory and recovery powers available to a trustee, provided the requisite connection with England and demonstrated a reasonable possibility of benefit to creditors.

The case also shows that establishing jurisdiction under section 265 is only the first step. The Court must still decide whether to exercise its discretion to make a bankruptcy order against a foreign debtor. Rajah J observed, however, that where jurisdiction is founded on the debtor having carried on business in England and Wales within the relevant period, the “sufficiently close connection” requirement will “almost certainly” be satisfied. In practice, the focus may therefore be on whether the bankruptcy is likely to produce a real benefit for creditors.

Conclusion

The decision in Lyons confirms that section 265 remains a flexible jurisdictional gateway capable of allowing creditors to take action against foreign-resident debtors whose commercial activities retain a meaningful connection with England and Wales. The judgment demonstrates the English Court’s willingness to look beyond labels and focus on economic reality.  It also provides a useful reminder that offshore residence does not necessarily place a debtor beyond the reach of English insolvency proceedings.