Court of Appeal rules that a 'see to it' guarantee cannot ground a bankruptcy petition, overturning Bristol County Court order in Matthews v BSN
On 11 November 2026, the Court of Appeal handed down judgment in Matthews v BSN (SW) Property Ltd [2026] EWCA Civ 1442, overturning a bankruptcy order that had been made on a personal guarantee. Lord Justice Nugee, with whom Lord Justices Stuart-Smith and Moylan agreed, held that clause 4.4 of the underlying share purchase agreement, which read 'The Buyer guarantees to each of the Seller and BSN the repayment of the Loans by the Company', was a 'see to it' guarantee rather than a conditional payment obligation. That distinction is legally critical: a 'see to it' guarantee creates an obligation whose breach sounds in unliquidated damages, not a debt for a fixed sum, and section 267 of the Insolvency Act 1986, which governs creditors' bankruptcy petitions, requires a liquidated (quantified) debt. The court applied the House of Lords authority in Moschi v Lep Air Services Ltd [1973] AC 331 and followed the Court of Appeal's earlier ruling in McGuinness v Norwich and Peterborough Building Society [2011] EWCA Civ 1286. The background involves a fish and chip business sold for £1 in 2019, with the company owing interest-free loans of £66,950 to BSN and £12,800 to Oak First, to be repaid within four years. The company stopped trading in 2020 and the loans were not repaid, leading to a joint bankruptcy petition and an order made at the County Court in Bristol in June 2024. The Court of Appeal also ruled that the first appeal judge was wrong to refuse the appellant permission to raise the construction point for the first time, since it was a pure question of law going to jurisdiction. Kitson Boyce acted for the respondents.
Why this matters
The ruling has practical significance across the insolvency and corporate finance bar. It confirms that the form of guarantee wording determines whether a creditor can petition for bankruptcy at all: a promise that a third party will pay (a 'see to it' guarantee) is not a liquidated debt, even if the damages recoverable are identical in amount to the unpaid loan. Creditors relying on guarantee clauses in acquisition or vendor finance documents to support insolvency proceedings will need to verify that the clause is worded as a conditional payment promise rather than as a 'see to it' undertaking. The decision also reinforces procedural flexibility: courts can permit a pure question of law going to their own jurisdiction to be raised for the first time on appeal.
On the Ground
This decision is directly relevant to insolvency litigation, banking and finance, and corporate restructuring practices. Lenders and trade creditors will want to review guarantee wording in their standard documentation to ensure that if enforcement via bankruptcy petition may ever be needed, the clause is structured as a primary payment obligation rather than a 'see to it' undertaking. Finance lawyers drafting acquisition guarantees need to flag this distinction to clients at the outset. Kitson Boyce acted for the respondents; the appellant was unrepresented at the Court of Appeal hearing. A trainee on a similar matter would prepare the trial bundle, draft a chronology of the guarantee and enforcement history, and research the case law on guarantee construction under Moschi and its progeny.
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