Antecedent transactions which can be pursued by a liquidator.

This article looks at other antecedent transactions which can be pursued by a liquidator.

Transaction at an Undervalue – Section 238 of the Insolvency Act 1986

This part of the legislation is investigated by the Liquidator of the company to ascertain if the Directors have sold or transferred any assets of the company for less than what they are worth or transferred for less than the market value. Legal proceedings under this legislation allows the Liquidator to make an application to the Court for an Order to restore the finances of the company to what it was before the transactions took place.

The Liquidator must have a valid case and evidence to support the following:-

• The third party paid a significantly lower value for the assets
• The transactions took place within two years (Unconnected party) or five years (Connected party) prior to the company being placed into liquidation
• The valuation of the asset transferred is crucial and often requires the engagement of third party agents

A Director of the company must be able to show with supporting evidence that that the transfer of the asset was under reasonable grounds and that he or she believed the transaction would benefit the company going forward. There are other mitigating circumstances.

Conclusion

If you want to find out anything further about this topic then please feel free to call me on 0330 236 9930, 0330 236 9938 or 07961 116321. All conversations will be in strict confidence. You can also email me vee@navigatebr.com.

This article is for information and interest only. It is not a substitute for full professional advice, which will take in to account the specific and individual circumstances. Navigate Business Recovery Limited cannot accept any responsibility for any loss arising as a result of any person or organisation acting or refraining from acting on any information.