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Voidable – Antecedent Transactions

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An antecedent transaction is a transaction made by the company which is at risk of being challenged and overturned following the company being placed into insolvency.

Types of antecedent transactions include:

  • Misfeasance transactions (see misfeasance page)
  • Transactions at an undervalue;
  • Preferential transactions;
  • Extortionate credit transactions;
  • Avoidance of floating charges; and
  • Transactions defrauding creditors.

In most cases, an unlawful transaction will cover one or more of the above mentioned categories. Here we will focus on the more common types of antecedent transactions which include, transactions at an undervalue, preferential transactions and transactions defrauding creditors.

When (why) would a company need this service?

Any transaction made by a company which is insolvent (either in Liquidation or Administration), or any transaction which occurred within 2 years prior to the company’s insolvency, could potentially be challenged by the Liquidator or Administrator. These are commonly known as antecedent transactions.

What are transactions at an undervalue?

Section 238(1) of the Insolvency Act 1986 provides that where a company goes into liquidation, and within the relevant time (two years before the date of liquidation) entered into a transaction with any person at an undervalue, the Liquidator may apply to the court for an order either reversing the transaction or seeking recovery of the company’s losses from the directors.

A transaction at undervalue will generally arise where:

  • The company makes a gift to a person or enters into a transaction with a person on terms that mean the company receives no consideration, or
  • The company enters into a transaction with a person for an amount which is significantly less than the transaction’s actual value.

What is preferential treatment of a creditor?

Under section 239(1) of the Insolvency Act 1986, if a transaction is made within the relevant time (see below) with any person which has the effect of ‘preferring’ that person over other unsecured creditors, then it is a preference and the court may make an order reversing the transaction or such other order against the directors to seek recovery for the company’s losses.

A company gives a preference to a person if:

  • 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
  • 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 that person would have been in if that thing had not been done.

The ‘relevant time’ of the transaction will depend on the recipient.  If the receiving party is a ‘connected’ party, then the relevant time is 2 years from the onset of insolvency.  However, if that party is ‘unconnected’ then the relevant time is 6 months from the onset of insolvency.

What are transactions defrauding creditors?

Section 423 of the Insolvency Act enables any ‘victim’ of an antecedent transaction to apply to the court for that transaction to be set aside. It is a widely drafted provision and also available to the Liquidator and Administrator, as well as, other creditors and members of the company.

This provision frequently overlaps with transactions at an undervalue and preferential treatment (see above), there is, however, an added requirement for the applicant to show that the purpose of the transaction was to put the assets beyond the reach of the creditors of the company.

Similar to the above, the court may make an order reversing the transaction or any order against the directors to seek to recover funds for the company.

The time limit for this type of claim will depend on the underlying transaction itself.

Is it expensive? What are the likely costs?

We will provide you with an estimate of costs at the outset based on the type of work required.

Our lawyers have extensive experience in advising clients who are faced with challenges regarding alleged antecedent transactions by Administrators and Liquidators. We will be able to provide you with bespoke and cost effective advice tailored to your circumstances.

Meet the Voidable – Antecedent Transactions 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 Warren
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
Lauren Smith
Employment and Family
Paralegal
greenwich
02083053543
lauren.smith@grantsaw.co.uk
Maleeha Iqbal
Residential Property
Licensed Conveyancer
greenwich
02083054232
maleeha.iqbal@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
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
Jamie
Support Staff
Head of IT
greenwich
02088586971
enquiries@grantsaw.co.uk
Jayne Lye
Support Staff
Office Manager
greenwich
02083054204
jayne.lye@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
Laura Danquah
Compliance Manager
greenwich
02083054222
laura.danquah@grantsaw.co.uk
Sue Holness
Support Staff
Customer Services
greenwich
02083054221
sue.holness@grantsaw.co.uk