Executive Summary
This case concerns a dispute between Somerset Equipment Finance (UK) Ltd ("Claimant"), an asset finance company, and Lan Support Ltd ("Defendant"), a finance broker. The Claimant paid the Defendant over £3.7 million for equipment invoices related to outdoor broadcasting equipment purportedly leased to Arena Holdings Limited ("Arena"). The equipment did not exist, and Arena subsequently went into liquidation. The contracts are void ab initio due to non-existence of the equipment, and the Claimant seeks repayment of the sums paid. The Defendant admits retaining commission but argues it should not repay beyond that, citing change of position and alleged knowledge by the Claimant of the transaction structure. The court is asked to grant summary judgment on the Defendant’s change of position defence.
Sanctions Highlights
— No sanctions implications identified in the case.
Emerging Risks
- Fraudulent asset finance schemes involving non-existent equipment pose significant risks to lenders.
- Complex multi-party transaction chains (involving Arena, CMI Corporation Limited, Lan Support, and PAF) can obscure liability and complicate recovery efforts.
- Insolvency of key counterparties (Arena) and large outstanding debts (£1 billion+) increase exposure for asset finance providers.
- Potential for claims against former bankers of Arena’s group companies for account reconstitution (£280 million claimed).
Geopolitical Impact
- The case involves UK entities (Somerset Equipment Finance, Lan Support, Primary Asset Finance) and a company (Arena) operating at Redhill Aerodrome, UK.
- The involvement of UK courts underscores the jurisdictional role of England and Wales in commercial disputes.
- The US is indirectly relevant as a major jurisdiction for asset finance and international insolvency, though not directly cited.
- Libya is not referenced in the case facts; geopolitical significance is primarily UK-centric.
Economic Intelligence
- The fraud involves over £3.7 million in invoiced sums and a broader indebtedness exceeding £1 billion within Arena and related companies.
- Liquidators’ claims against former bankers for £280 million highlight systemic financial risks and potential banking sector liabilities.
- The case illustrates vulnerabilities in asset finance markets, particularly in equipment leasing and broker-mediated transactions.
- Recovery prospects remain uncertain given Arena’s liquidation and the void nature of contracts.
Strategic Recommendations
- Asset finance companies should enhance due diligence on equipment existence and ownership verification, especially when intermediaries are involved.
- Contracts should explicitly address risks of non-existence and include robust warranties and representations.
- Legal teams should prepare to challenge change of position defences where contracts are void ab initio.
- Monitor insolvency proceedings and related banking litigation for potential recovery opportunities.
- Consider tighter regulatory oversight or industry standards for brokers and intermediaries like PAF to reduce fraud risk.
---
**Source Notes:**
Sanctions Intelligence Digest — [https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/586.txt](https://empyreanprotocol.com/litigation/view/www.bailii.org/ew/cases/EWHC/Comm/2025/586.txt)