8/6/2019 Checklists - Antecedent Transactions
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Comparative checklist - antecedent transactions
All references to
statute InsolvencyAct 1986
Transactions at anundervalue (s238)
Preferences (s.239) Extortionate credittransactions (s244)
Avoidance offloating charges
(s245)
Transactionsdefrauding creditors
(s.423)
Who can apply? liquidator withconsent/administrator
liquidator withconsent/administrator
liquidator withconsent/administrator
no need for
applicationautomatically void
if criteria are fulfilled.
liquidator withconsent/administrator/any other party
prejudiced by thetransaction (s.424)
Definition Company transfers assetfor no consideration orless
than value of asset.
Any transaction madewith a 3rd party creditorwhich puts a
creditor,guarantor or surety in abetter position oninsolvency AND
thecompany desired this.
Any transaction providingcredit to the companyrequiring it to
makegrossly exorbitantpayments or whichgrossly contravenes
theordinary principles of fairdealing.
Any creation of afloating chargewhere there was nofresh
consideration.
Not applicable tofinancial collateralarrangements.
Any transaction at anundervalue entered intoby the company for
thepurpose of puttingassets beyond the reachof a creditor so as
tofrustrate an actual orpotential claim that thecreditor has
against thecompany.
Relevant time beforeinsolvency
2 year- period before theonset of insolvency.
Action must be broughtwithin 6 years of theonset of
insolvency.
6 month-period beforethe onset of insolvency(if =unconnected
party).
Action must be broughtwithin 6 years of theonset of
insolvency.
3 year- period before theonset of insolvency.
Action must be broughtwithin 6 years of theonset of
insolvency.
12 months before theonset of insolvency(if =
unconnectedparty).
No relevant time.
Insolvent at the time? Company is unable topay debts at the time
oras a result of thetransaction.
Company is unable topay its debts at the timeor as a result of
thepreference.
No need to be insolventat the time/becomeinsolvent as a result
ofthe transaction.
Company is unableto pay its debts atthe time or as aresult of
thepreference (if =unconnected party).
No need to be insolventat the time and no needto have entered
aninsolvency process.
Effect of connectedperson?
Presumption ofinsolvency at the time.
Relevant time increasesto 2 yrs before the onsetof
insolvency.
The desire to prefer ispresumed when thepreference is for a
N/A Relevant timeincreases to 2 yrsbefore the onset
ofinsolvency.
Solvency test isirrelevant if the
N/A
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connected party. charge is for aconnected party.
Defence Made in good faith andfor carrying on thebusiness.
Reasonablegrounds to believe thetransaction would benefitthe co.
(s.238(5)).
The preference was aside-effect of another
action NOT an activedesire to prefer.
Credit terms werereasonable.
Fresh considerationis given/debt isreleased in return forthe new
security.
Purpose was NOT toplace assets beyond thereach of creditors.
NB:Connected person: s.249 IA 1986 D or shadow D or an
associateAssociate: s.435 IA 1986 very wide.
Onset of insolvency: If = compulsory liquidation date when
winding-up petition is presented to the court; if = voluntary
liquidation date when co
passes the resolution for its winding-up; if = administration
date on which application to court is made OR date on which
thecourt seals the notice of appointment of the administrator.
Unable to pay its debts: use tests under s.123 IA 1986.
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