ANTECEDENT RECOVERIES – PREFERENCES AND TRANSACTIONS AT AN UNDERVALUE
31.4A.1 Introduction – generalThe main purpose of liquidation and bankruptcy is to effect an orderly and equitable realisation of assets for the general benefit of creditors and contributories. If some act occurs in the run-up to the insolvency which leads to one creditor being treated more favourably than another, the transaction may well be one which gives rise to recovery rights by an administrator, liquidator or trustee. Similarly, if a person other than a creditor has benefited from the company or bankrupt to the detriment of creditors generally, the Act may provide a remedy. These remedies would generally be termed “antecedent recoveries”. The Act provides an administrator, liquidator or trustee with opportunities to recover assets/monies and/or to avoid certain events (e.g. the granting of charges) for the benefit of all creditors.
31.4A.2 Explanation of term antecedent
The term "antecedent" means a preceding thing or circumstance, and is used to describe this sort of transaction as it occurred before a particular event (e.g. the presentation of the petition or the date of the bankruptcy order) usually within a specified time prescribed by the Act.
31.4A.3 Scope of the Chapter
This Chapter gives advice and information on the two most common forms of antecedent recovery, preferences (see Part 2) and transactions at an undervalue (see Part 3). Other forms of antecedent recovery are covered in Chapter 31.4B. For ease of reference, those other forms of antecedent recoveries covered in Chapter 31.4B are listed below.
The chapter is divided into the following parts:
Part 1 – Realisation of preferences and transactions at an undervalue (paragraphs 31.4A.4 to 31.4A.24)
Part 2 – Preferences (paragraphs 31.4A.25 to 31.4A.58)
Part 3 – Transactions at an undervalue (paragraphs 31.4A.59 to 31.4A.104)
Part 4 – Antecedent recoveries – common themes (paragraphs 31.4A.105 to 31.4A.117)
The following abbreviations are used in this Chapter:
CAB – Citizens’ Advice
MRS – Mortgage Rescue Scheme
RSL – Registered Social Landlord
Part 3 – Avoidance of charges (paragraphs 31.4B.38 to 31.4B.65)
Part 4 – Civil recoveries following the misconduct of directors (paragraphs 31.4B.66 to 31.4B.88)
Companies and bankruptcies
Part 5 – Avoidance of dispositions of property (paragraphs 31.4B.89 to 31.4B.120)
Part 6 – Extortionate credit transactions (paragraphs 31.4B.121 to 31.4B.136)
Part 7 – Transactions defrauding creditors (paragraphs 31.4B.137 to 31.4B.154)
Part 8 – Avoidance of general assignment of book debts (paragraphs 31.4B to 31.4B.171)
Part 9 – Recovery of excessive pension contributions (paragraphs 31.4B.172 to 31.4B.183)
[On to Part 1 – Realisation of preferences and transactions at an undervalue]