This website uses cookies to ensure you get the best experience on our website. Learn more

LPC Law Notes Business Law and Practice Notes

Recovery Of Assets Notes

Updated Recovery Of Assets Notes

Business Law and Practice Notes

Business Law and Practice

Approximately 649 pages

A collection of the best LPC BLP notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short these are what we believe to be the strongest set of Business Law and Practice notes available in the UK this year. This collection of notes is fully updat...

Available here

The following is a more accessible plain text extract of the PDF sample above, taken from our Business Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

RECOVERY OF ASSETS

Definition Who When does it apply Test Exception/Defence Relevant time Outcome
Transactions at an undervalue 238 238(4) – A gift or a transaction where the company received consideration (in money or money’s worth) significantly lower in value than it provided 238(1)-(2) – A liquidator or administrator 238(1) – where a company enters administration or goes into liquidation

238(4)(a) – gift to a person, enters into a transaction to receive no consideration, or

(b) enters into a transaction for consideration significantly less than the value

 238(5) – Entered into in good faith for the purpose of carrying on the business and, at the time, there were reasonable grounds for believing that the transaction would benefit 240 – unable to pay its debts (123) at the time or as a result AND takes place within 2 years ending with the presentation of the petition (commencement of liquidation) (240(1)(a)) 238(2) – apply to the court for an order to return the position they would have been in but for the transaction. Orders in 241
Preferences 239 239(4) – where one creditor is preferred by the company in that it has been put in a better position on insolvent liquidation 239(1)-(2) – A liquidator or administrator 239(1) – where a company enters administration or goes into liquidation

239(4)(a) – the person is the company’s creditor, surety or guarantor

239(4)(b) – the person has been put in a better position upon insolvent liquidation than he would have been had the event not occurred

239(5) – the company must have desired to prefer the creditor/guarantor/surety

239(6) – a desire is presumed if the creditor is connected with the company ( 249;435)

Re MC Bacon – no desire to prefer when genuine commercial pressure*

 240 – unable to pay its debts (123) at the time or as a result AND takes place within 6 months ending with the presentation of the petition, or 2 years for a connected person (240(1)(a)-(b)) 239(3) – apply to the court for an order to return the position they would have been in but for the transaction. Orders in 241 – (return property, return proceeds of sale or discharge security)
Extortionate credit transactions 244 244(3) – A transaction that is ‘extortionate’ 244(2) – A liquidator or administrator 244(2) – where a company enters administration or goes into liquidation 244(3) – the transaction was grossly exorbitant or it grossly contravened the ordinary principles of fair dealing It is extremely hard to show that payments are grossly exorbitant: rare in practice 244(2) – entered into within 3 years of the presentation of the petition 244(4) – apply to the court for an order under this section
Floating charges 245

Invalidates floating charges on an existing debt for no new consideration

NB: May also be voidable as a preference

 245(2) – no need for application – automatically void 245(1) – where a company enters administration or goes into liquidation 245(2) – A floating charge, for an existing debt for no new consideration

UNCONNECTED:

245(3)(b) – 12 months ending with the presentation of the petition AND 245(4) unable to pay its debts (123) at the time or as a result

 L/A will usually write to the charge holder stating that they believe it to be invalid. The charge holder will then either seek to enforce the charge and force L into injunctive proceedings, or seek a declaration from the court that the charge is valid

CONNECTED:

245(3)(a) – 2 years ending with the presentation of the petition no requirement for insolvency at the time 245(4)
Transactions defrauding creditors 423 A transaction putting assets beyond the reach of creditors 423(2)/424 – ANY VICTIM

423(1) – At an undervalue (as 238)

423(3) – to put assets beyond the reach of a claimant, or to prejudice the interests of someone in relation to a claim

 Intention for 423(3) is hard to prove NO TIME LIMIT: Use where the transaction occurred before insolvency/where the time limit for 238 has expired

423(2) – aims to restore position and protect interests

425 – orders similar to those under 241

*Bank agreed to an increased overdraft subject to taking a floating charge. This was not a desire to prefer; a desire to prefer is a positive wish.

Definition Who Insolvent? Test Outcome/Defence

Fraudulent Trading

IA 213

 When a person allows an insolvent company to continue its business with the intention of defrauding creditors 213(2) - Liquidator 213(1) – In the course of winding up

213(1) – business has been carried on...

Buy the full version of these notes or essay plans and more in our Business Law and Practice Notes.

More Business Law And Practice Samples