Annex A

Procedure

Brief summary

Section (Insolvency Act 1986)

Time limit

Time limit where beneficiary connected party or associate

Need to show insolvency at time of transaction?

Insolvency presumed where beneficiary connected party or associate?

Alternative procedure

Notes

Preferences

 

(see Part 2 of Chapter 31.4A)

Repayment of a debt

s239 and s340

Six months prior to the presentation of the petition

Two years prior to the presentation of the petition

Yes

No

Avoidance of disposition if preference made post-petition

Also need to show desire to prefer – which is presumed where beneficiary connected or associate

Transactions at an undervalue

 

(see Part 3 of Chapter 31.4A)

Transferring an asset for less than its value

s238 and s339

Companies – two years prior to the presentation of the petition

 

Bankruptcies – five years prior to the presentation of the petition

No difference

Companies – Yes

 

Bankruptcies – Only if transaction was entered into more than two years prior to the presentation of the petition

Yes

Transactions defrauding creditors

 

Misfeasance (companies only)

 

Avoidance of disposition if transaction entered into post-petition

Defence of “good faith” in companies

Transactions defrauding creditors

 

(see Part 7 of Chapter 31.4B)

Transferring an asset at less than its value

s423

No time limit

No time limit

No – person who gave property away does not even need to be in “formal” insolvency to trigger provision

N/A

Transactions at an undervalue

 

Misfeasance (companies only)

 

Avoidance of disposition if transaction entered into post-petition

Need to show intent to defraud (rather than just fact)

 

 

Avoidance of floating charges (companies only)

 

(see Part 3 of Chapter 31.4B)

Cancellation of charges made in lead up to formal insolvency

s245

12 months prior to presentation of petition

Two years prior to the presentation of the petition

Yes

No

Misfeasance

 

Avoidance of charges due to non-registration (Companies Act 1985 s395)

Charge not avoided where it was given for new value

Avoidance of dispositions of property

 

(see Part 5 of Chapter 31.4B)

Reversal of dispositions of insolvent’s property made after presentation of petition

s127 and s284

Deals only with dispositions between petition and order

Deals only with dispositions between petition and order

No

N/A

Misfeasance (companies only)

Disposition can be validated by court – before or after disposition

Avoidance of general assignments of book debts (bankruptcies only)

 

(see Part 8 of Chapter 31.4B)

 

Cancellation of assignments of book debts if assignment not registered under Bills of Sale Act 1878

s344

Deals with any unregistered assignment

Deals with any unregistered assignment

No

N/A

Transaction at an undervalue

None

Misfeasance (companies only)

 

(see Part 4 of Chapter 31.4B)

Recovery of sums from directors who have caused losses to company

s212

None

None

No

N/A

Fraudulent trading (s213)

 

Wrongful trading (s214)

Action brought in name of company against directors personally

Extortionate credit transactions

 

(see Part 6 of Chapter 31.4B

Reversal of unfair terms (including interest) in credit agreements

s244 and s343

Three years prior to the winding-up or bankruptcy order

Three years prior to the winding-up or bankruptcy order

No

N/A

Transaction at an undervalue

Unfair credit terms must be “grossly” exorbitant.

Excessive pension contributions

 

(see Part 9 of Chapter 31.4B)

Recovery of excessive pension contributions made by bankrupt

s342A

None

None

No, but contributions must have unfairly prejudiced creditors

N/A

Avoidance of disposition if contributions made post-petition

None