Antecedent Transactions: Undervalue and Preference

Antecedent Transactions: Undervalue and Preference are transactions entered into prior to the insolvency that can be set aside by an Insolvency Practitioner in certain insolvency proceedings.

Antecedent Transactions

Transactions at an Undervalue

These are transactions within 2 years of the relevant insolvent date (in the case of bankruptcy that period can extend to 5 years) which appear to be for less than their money’s worth. Such transactions can be set aside by the officeholder of the insolvent estate for the benefit of creditors.

 

Typically such transactions will involve transfers of money or property to connected and or associated parties. The applicable statutory provisions are Section 238 of the Insolvency Act 1986 and Section 339 of the Insolvency Act 1986.

These are transactions within 2 years of the relevant insolvent date (in the case of bankruptcy that period can extend to 5 years) which appear to be for less than their money’s worth. Such transactions can be set aside by the officeholder of the insolvent estate for the benefit of creditors.

 

Typically such transactions will involve transfers of money or property to connected and or associated parties. The applicable statutory provisions are Section 238 of the Insolvency Act 1986 and Section 339 of the Insolvency Act 1986.

Preferences

These are transactions within 2 years of the relevant insolvent date which appear to have put someone in a better position than which they ought to have been and influenced by a desire to prefer them.

 

Such transactions can be set aside by the officeholder of the insolvent estate for the benefit of creditors if certain insolvency and other criteria are met. Typically such transactions will involve transfers of money or property to connected and or associated parties.

 

The applicable statutory provisions are Sections 239 of the Insolvency Act 1986 or Section 340 of the Insolvency Act 1986.

Transactions Defrauding Creditors

These are transactions that have no limitation period undertaken to put assets beyond the reach of creditors at an undervalue.

 

Such transactions can be set aside by the officeholder of the insolvent estate for the benefit of creditors if certain insolvency and other criteria are met. The applicable statutory provision is Section 423 of the Insolvency Act 1986.