The decision overturns a series of cases deemed to have over-expanded a principle preventing shareholders from claiming against third parties for falls in a company’s value.

By Oliver Middleton and Thomas F. Lane

On 15 July 2020, the UK Supreme Court unanimously overturned a Court of Appeal decision that had barred a creditor of companies owned and directed by an individual from bringing tort claims against him for allegedly asset-stripping the companies in order to prevent them paying a court-ordered debt to that creditor. In Sevilleja v. Marex Financial Ltd,[1] the Supreme Court ruled that the “reflective loss” principle — restricting third parties from suing persons alleged to have harmed a company in a manner that caused “reflective loss” — should be narrowed so as only to apply to situations involving shareholders claiming for diminutions in value.