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Antecedent transactions in bankruptcy

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A trustee in bankruptcy and, in some cases, victims of certain transactions, can challenge transactions that the bankrupt entered into before bankruptcy. If a challenge is successful, the court can undo the transaction or make some other order to ensure the creditors of the bankruptcy estate are not (entirely) prejudiced.

A trustee in bankruptcy and, in some cases, victims of certain transactions, can challenge transactions that the bankrupt entered into before bankruptcy. If a challenge is successful, the court can undo the transaction or make some other order to ensure the creditors of the bankruptcy estate are not (entirely) prejudiced.

Claims by Trustee in Bankruptcy

In order to comply with their fundamental duties, trustees must look into any transactions or dealings concerning the disposition of property prior to the commencement of the bankruptcy. There are some circumstances where the payment of money or transfer of property prior to the bankruptcy may be challenged by the trustee. These include:

  • Transactions at an undervalue – this could be a gift or sale of the bankrupt’s property for significantly less than its worth. When considering transactions at an undervalue, a trustee in bankruptcy can investigate any transaction going back as far as five years prior to the presentation of the bankruptcy petition;
  • A preference – this relates to a payment or security for a debt from the bankrupt with a view of putting the recipient in a better position than other creditors. When considering whether or not there is a preferential transaction, a trustee in bankruptcy can investigate transactions going back 2 years prior to the presentation of the bankruptcy petition, if the transaction was with a family member or associate. However, if the transaction was with a creditor who is not associated to the debtor, the trustee can only go back as far as six months prior to the presentation of the petition;
  • Transactions defrauding creditors – See below.

Whilst a trustee in bankruptcy can bring a claim in respect of one of the above, there is some protection afforded to those who can demonstrate that they acted in “good faith”. For instance, those who have no knowledge of the insolvency (or potential insolvency) of the individual concerned at the time of the transaction.

Transactions defrauding creditors

These types of transactions entitle the creditor themselves, or a trustee in bankruptcy on behalf of a creditor, to bring a claim.

A transaction defrauding creditors is a gift or a transfer of property which (i) is a transaction at an undervalue; and (ii) is intended to put the money or asset beyond the reach of creditors at any time in the future.

The time limits to bring such a claim are longer than for transactions at an under value and preferences. As above, there is some protection afforded to those who can demonstrate that they “acted in good faith”.

If the claim is proved, the court has wide powers including restoring the position to what it would have been if the transaction had not taken place and/or protecting the interests of the victims of the transaction.

There are other situations in which payments made or things done by the bankrupt may be re-opened and adjusted for the benefit of the creditors of the bankrupt’s estate. Note: these are claims that can be brought by the trustee and not individual creditors. These include:

  • Extortionate credit transactions;
  • Avoidance of assignment of certain debts;
  • Excessive pension contributions.

Legal issues often arise in connection with challenges to transactions entered into by a person before they are made bankrupt. Our solicitors are able to provide advice on the many issues that can arise in this area and assistance with court proceedings where necessary. For more information, please email [email protected] or contact our insolvency experts directly on 020 8858 6971.

Meet the Antecedent transactions in bankruptcy team
Ray Crudgington
Managing Partner
greenwich
02083054224
ray.crudgington@grantsaw.co.uk
Maria Lati
Partner
Head of Residential Property
blackheath
02083054229
maria.lati@grantsaw.co.uk
Mike Clary
Partner
Head of Family
greenwich
02083054237
mike.clary@grantsaw.co.uk
Kalpa Prajapati
Partner
Head of Private Client
blackheath
02083053536
kalpa.prajapati@grantsaw.co.uk
Mario Savvides
Partner
Head of Commercial Property
greenwich
02083053531
mario.savvides@grantsaw.co.uk
Sarah-Kate Jackson
Partner
Head of Litigation
greenwich
02083054236
sarah-kate.jackson@grantsaw.co.uk
Adina-Leigh Collins
Litigation
Solicitor
greenwich
02083053556
adina-leigh.collins@grantsaw.co.uk
Aimal Gram
Commercial Property
Solicitor
greenwich
02083053524
aimal.gram@grantsaw.co.uk
Aisha Mohammed
Residential Property
Solicitor
greenwich
02083054228
aisha.mohammed@grantsaw.co.uk
Aishat Balogun
Aishat Balogun
Family
Solicitor
greenwich
02083054214
aishat.balogun@grantsaw.co.uk
An Le Tran
Commercial Property
Professional Support Solicitor
greenwich
02083054226
anle.tran@grantsaw.co.uk
Angus Young
Litigation
Solicitor
greenwich
02083054225
angus.young@grantsaw.co.uk
Atifha Aftab
Atifha Aftab
Family
Solicitor
greenwich
02083054238
atifha.aftab@grantsaw.co.uk
Bimal Kotecha
Litigation
Solicitor
greenwich
02083053523
bimal.kotecha@grantsaw.co.uk
Charlotte Mandy
Charlotte Warren
Private Client
Solicitor
blackheath
02083054231
charlotte.warren@grantsaw.co.uk
Claire Mac Mahon
Litigation
Solicitor
greenwich
02083053537
claire.macmahon@grantsaw.co.uk
Deborah Taite
Residential Property
Solicitor
blackheath
02083053542
deborah.taite@grantsaw.co.uk
Emily Pearce
Residential Property
Solicitor
greenwich
02083053526
emily.pearce@grantsaw.co.uk
Georgia Beales
Litigation
Paralegal
greenwich
02083054206
georgia.beales@grantsaw.co.uk
James McKimm
James McKimm
Corporate and Commercial
Solicitor
greenwich
02083054217
james.mckimm@grantsaw.co.uk
Jeremy Brooks
Jeremy Brooks
Private Client
Solicitor
blackheath
02083053534
jeremy.brooks@grantsaw.co.uk
Joanna Godden
Notary Public
Notary
greenwich
02083083535
joanna.godden@grantsaw.co.uk
Kim Whitaker
Kim Whitaker
Corporate and Commercial
Head of Corporate and Commercial
greenwich
02083053539
kim.whitaker@grantsaw.co.uk
Laura Danquah
Compliance Manager
greenwich
02083054222
laura.danquah@grantsaw.co.uk
Lauren Smith
Employment and Family
Paralegal
greenwich
02083053543
lauren.smith@grantsaw.co.uk
Mandeep Clair
Family
Solicitor
greenwich
02083054235
mandeep.clair@grantsaw.co.uk
Michael Pope
Employment
Consultant Solicitor
greenwich
02083053540
michael.pope@grantsaw.co.uk
Michelle Pinnington
Michelle Pinnington
Residential Property
Solicitor
greenwich
02083054216
michelle.pinnington@grantsaw.co.uk
Noella Gooden
Employment
Solicitor (Australian qualified)
greenwich
02083053543
noella.gooden@grantsaw.co.uk
Raj Waghela
Raj Waghela
Residential Property
Solicitor
greenwich
02083053529
raj.waghela@grantsaw.co.uk
Randeep Thethy
Randeep Thethy
Residential Property
Solicitor
greenwich
02083054209
randeep.thethy@grantsaw.co.uk
Ruggero Pesciatini
Ruggero Pesciatini
Corporate and Commercial
Paralegal
greenwich
02083054220
ruggero.pesciatini@grantsaw.co.uk
Sarah Conner
Sarah Conner
Private Client
Solicitor
blackheath
02083054234
sarah.conner@grantsaw.co.uk
Simran Lalli
Simran Lalli
Employment
Solicitor
greenwich
02083054208
simran.lalli@grantsaw.co.uk
Susan Collins
Commercial Property
Solicitor
greenwich
02083054200
susan.collins@grantsaw.co.uk
Tatiana Zenina
Tatiana Zenina
Private Client
Solicitor
blackheath
02083054239
tatiana.zenina@grantsaw.co.uk
Trisha Djemal
Trisha Djemal
Residential Property
Consultant Solicitor
blackheath
02083053546
trisha.djemal@grantsaw.co.uk
Tyrone Grant
Residential Property
Head of Leasehold Enfranchisement
blackheath
02083053522
tyrone.grant@grantsaw.co.uk
Denise
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Jayne Lye
Support Staff
Office Manager
greenwich
02083054204
jayne.lye@grantsaw.co.uk
Jamie
Support Staff
Head of IT
greenwich
02088586971
enquiries@grantsaw.co.uk
Kasia
Accounts Staff
greenwich
02088586971
enquiries@grantsaw.co.uk
Michael Tobin
Michael Tobin
Support Staff
Marketing and Business Development Manager
greenwich
02083053550
michael.tobin@grantsaw.co.uk
Sue Holness
Support Staff
Customer Services
greenwich
02083054221
sue.holness@grantsaw.co.uk