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Challenging Antecedent Transactions Notes

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Challenging Antecedent Transactions (PLC) Ground of challenge

Conditions for successful challenge

Timing issues

Who can bring a challenge?

Transaction at an undervalue

The company transferred an asset to another party for no consideration, or for significantly less than the asset's true value.

Any transaction in the twoyear period before the onset of insolvency.

Liquidator (with appropriate sanction)

(section 238)

The company was insolvent at the time of the transaction or became insolvent as a result of the transaction. The company's insolvency is presumed if the transaction was with a connected person.

The action must be brought within six years of the onset of insolvency.

Administrator

The challenge will fail if the transaction was made in good faith, for the purpose of carrying on business and there are reasonable grounds to believe the transaction was for the benefit of the company. Preference (section 239)

Extortionat e credit transaction

The transaction put the creditor Any transaction during the in a better position than it six-month period before the would otherwise have been in onset of insolvency. on the company's insolvency. A transaction with a The company was influenced connected person in the two by the desire to prefer the years before the onset of creditor. This intention is insolvency. presumed where the The action must be brought transaction was with a within six years of the onset connected person. of insolvency. The company was insolvent at time of the transaction or became insolvent as a result of the transaction.

Liquidator (with appropriate sanction)

The terms of the credit transaction either require the company to make grossly

Liquidator

Any transaction providing credit to the company made in the three years before the

Administrator

Administrator

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