Insolvency Practitioners, including Liquidators and Administrators will examine the antecedent transactions of a Company to determine whether any assets were disposed of for less than their true market value.
Section 238 of the Insolvency Act 1986 allows a Liquidator or Administrator to apply to the Court for Order restoring the position of the Company to what it was had the transaction not occurred.
The Liquidator must be able to show that –
The defences available for any person faced with a claim for a transaction at undervalue are the following –
Therefore, when faced with a claim by a Liquidator or Administrator for a transaction at undervalue / s238 claim one needs to think about the following –
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