When a company is in financial trouble, the directors may undertake measures to try and move assets out of the reach of creditors. For example, they may transfer their or their company’s property to third parties.
Examples of transactions that can be challenged following insolvency include:
- Continuing to trade beyond a point at which the directors knew or should have known the company would not avoid insolvency
- Making payments to some creditors at the expense of others, for instance to a bank that the director has given a personal guarantee to
- Transferring assets at undervalue (or for no value)
- Transferring assets to third parties to avoid them being used for the benefit of creditors
Antecedent transactions can be ‘set aside’, however. This means that a trustee in bankruptcy or a liquidator or administrator can recover the assets (or their value) for the benefit of all creditors.
Our Insolvency team works with insolvency practitioners to unpick antecedent transactions as well as acting for those against whom such claims are made. Having acted for parties on both sides of such claims we are ideally placed to anticipate what the other party will be thinking and to plan strategies accordingly.