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Transaction Avoidance in Insolvencies$
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Rebecca Parry, James Ayliffe, Sharif Shivji, Hamish Anderson, and William Trower

Print publication date: 2018

Print ISBN-13: 9780198793403

Published to Oxford Scholarship Online: March 2021

DOI: 10.1093/oso/9780198793403.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 23 January 2022

Transactions at an Undervalue (Insolvency Act 1986, Sections 238 and 339)

Transactions at an Undervalue (Insolvency Act 1986, Sections 238 and 339)

Chapter:
(p.77) 4 Transactions at an Undervalue (Insolvency Act 1986, Sections 238 and 339)
Source:
Transaction Avoidance in Insolvencies
Author(s):

Rebecca Parry

Sharif Shivji

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198793403.003.0006

Sections 238 (corporate insolvency) and 339 (bankruptcy) target gifts, transfers for no or insufficient consideration, and transactions with a gift element entered into by the debtor on the eve of insolvency, to the detriment of creditors. The sections themselves are relatively straightforward in operation. The main conditions for challenging a transaction are that (a) the debtor either received no consideration or received consideration of a value significantly less than the consideration he gave (in bankruptcy the section also operates where a transaction has been entered in consideration of marriage); and (b) the transaction must have been entered into at a ‘relevant time’ which consists of two elements: the transaction must have taken place within a particular time period occurring immediately prior to insolvency, and it must also be established that the transacting party was insolvent at the time of the transaction or as a result of it. In corporate insolvency cases, a defence is available where the transaction was entered into in the reasonable belief that it would benefit the company. The simplicity of these provisions makes them a powerful weapon for office holders, as does the fact that the burden of proof shifts in favour of the officeholder where

Keywords:   conventional gifts, cross-border transactions, cross-stream guarantee, deferred entitlements, good faith, group reorganizations, guarantees and collateral security, measurable consideration, procedural matters, transactions defrauding creditors

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