When a company slides into insolvency, the assets left for creditors are often less than they should be — because in the months or years beforehand, the company gave things away, sold them too cheaply, paid off favoured creditors, or hid assets from people it owed. The law gives officeholders (and sometimes others) statutory tools to unwind these earlier transactions and pull value back into the estate so it can be shared fairly. As a solicitor, you'll need to spot these claims quickly: which ground applies, what has to be proved, and what defences a counterparty might raise.
What this lesson covers:
- Overview and Key Concepts — the five claw-back grounds, who can bring them, the two tests for insolvency, and why 'connected person' status matters.
- Transactions at an Undervalue — gifts and bargains that strip value from the company, the two-year look-back, and the good faith defence.
- Preferences — favouring one creditor over the rest, the desire to prefer, and the connected-party presumption.
- Distinguishing Undervalues and Preferences — how to tell the two apart in practice.
- Invalid Floating Charges — when a floating charge fails and how new consideration saves it.
- Transactions Defrauding Creditors — the freestanding tool with no time limit and no insolvency requirement.