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If you are a director or creditor of an insolvent company, Oliver Elliot can help you address your concerns arising from the insolvency and section 239 of the insolvency act 1986.

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Investigation Powers

How can an Insolvency Practitioner use Section 239 of the Insolvency Act 1986 to recover money and property when a creditor has been put into a better position?

Section 239 of the Insolvency Act 1986 can be used by the Insolvency Practitioner to issue legal proceedings for compensation following when company assets and property has been transferred within two years of the commencement of insolvency of a limited company in a preference to other creditors, putting them in a better position. This is known as an antecedent transaction.

239 Preferences (England and Wales).

(1) This section applies as does section 238.

(2) Where the company has at a relevant time (defined in the next section) given a preference to any person, the office-holder may apply to the court for an order under this section.

(3) Subject as follows, the court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not given that preference.

(4) For the purposes of this section and section 241, a company gives a preference to a person if—

(a) that person is one of the company’s creditors or a surety or guarantor for any of the company’s debts or other liabilities, and

(b) the company does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the company going into insolvent liquidation, will be better than the position he would have been in if that thing had not been done.

(5) The court shall not make an order under this section in respect of a preference given to any person unless the company which gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (4)(b).

(6) A company which has given a preference to a person connected with the company (otherwise than by reason only of being its employee) at the time the preference was given is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in subsection (5).

(7) The fact that something has been done in pursuance of the order of a court does not, without more, prevent the doing or suffering of that thing from constituting the giving of a preference.

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This page: Section 239 of the Insolvency Act 1986 is not legal advice and should not be relied upon as such. Section 239 of the Insolvency Act 1986 is provided for information purposes only. You can Contact Us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.