IP assets and insolvency

The recent High Court decision in Garden House Software Ltd v Marsh and others [2026] EWHC 2184 (Ch) is a timely reminder that transfers of software rights and other IP out of a distressed company need to be approached with care, supported by proper valuation evidence and recorded in a way that will withstand later scrutiny.

The case concerned the transfer of software associated with a platform from Serisys Limited to another group company, Serisys Asset Holding Limited, at a time when the operating company was in financial difficulty. The Court found that the assignment was a transaction at an undervalue and a transaction defrauding creditors, and ordered substantial monetary relief against two directors after concluding that valuable IP had been moved beyond the reach of creditors.

Why the decision matters

Businesses often reorganise ownership of technology, trade marks, data, know-how and related contractual rights for entirely justifiable commercial reasons such as: to simplify licensing; attract investment; secure funding; or prepare for a sale. But where the disposing company is insolvent, becomes insolvent because of the transaction, is bordering on insolvency, or just facing creditor pressure, the commerciality of the transaction will be examined in the event of the company’s liquidation. The question is not simply whether the rationale sounded commercial at the time; it is whether the company received proper value, whether creditors were prejudiced, and whether the directors discharged their duties in the interests of the company or, the closer the company is to insolvency, its creditors.

Key takeaways for IP asset transactions

• Identifying the IP by auditing and mapping and verifying title is crucial – especially unregistered assets.
• Establish true value before the deal is done. IP should not be transferred for nominal or untested consideration simply because it sits within a wider group restructure. Obtain expert valuation evidence appropriate to the asset, its development history, revenue potential, ownership chain and commercial alternatives.
• Document the commercial rationale and minute the decision properly. Board minutes should record why the transaction benefits the company making the disposal, not the wider group, a funder or a connected party.
• Manage connected-party risk. Transfers to group companies, shareholders, directors, funders or relatives invite particular scrutiny. Independent advice and clear conflict management can be critical.
• Check the asset perimeter. In software and technology businesses, the “IP” may include copyright, database rights, confidential information, documentation, licences, development materials and customer-facing rights. The transaction documents should be clear around what is, and is not, being transferred.
• Joined up insolvency and IP advice. A technically sound assignment may still be vulnerable if insolvency issues are not addressed, conversely, a defensible insolvency process depends on understanding the actual value and legal status of the IP being transferred.

The consequences of getting it wrong

A distressed IP transfer that is not supported by fair value, careful analysis and robust documentation may be challenged as a transaction at an undervalue, a transaction intended to put assets beyond creditors’ reach, or outside the powers of those executing the documents. Directors may also face claims for breach of duty and dishonest assistance, and recipients or connected parties may be exposed where they have participated in or benefited from the transaction. In practice, the evidential record can be as important as the legal mechanics, minutes, valuation work and transaction documents need to be structured to tell a coherent story, and if they do not, the deal may be difficult to defend later.

How we can help

For companies, investors, office-holders and purchasers of technology assets, the message is clear: treat IP disposals out of distressed businesses as transactions requiring discipline, evidence and governance.

Ward Hadaway can support with IP ownership diligence, insolvency risk analysis, board papers, minutes, assignment documents and transaction structuring so that valuable assets can be dealt with commercially while reducing the risk of later challenge.