{"id":189113,"date":"2024-07-09T06:18:24","date_gmt":"2024-07-09T05:18:24","guid":{"rendered":"https:\/\/legalvision.co.uk\/?p=189113"},"modified":"2024-07-09T06:18:25","modified_gmt":"2024-07-09T05:18:25","slug":"voidable-transactions","status":"publish","type":"post","link":"https:\/\/legalvision.co.uk\/corporations\/voidable-transactions\/","title":{"rendered":"Do Voidable Transactions Survive Liquidation?\u00a0"},"content":{"rendered":"\n

In the complex landscape of corporate finance and insolvency law, voidable transactions hold a significant yet often misunderstood role. Businesses in the UK, particularly larger enterprises, need to understand their implications. This article aims to shed light on how voidable transactions can affect the financial stability and continuity of UK businesses.<\/p>\n\n\n\n

Types of Voidable Transactions <\/h2>\n\n\n\n

Let us explore four different types of voidable transactions below:<\/p>\n\n\n\n

    \n
  1. Preferences: <\/strong>Preferential transactions that favour one creditor over others.\u00a0 If a company, shortly before going into liquidation, repays a debt to a preferred creditor, this transaction may be voided<\/a>;<\/li>\n\n\n\n
  2. Transactions at Undervalue:<\/strong> Deals where the insolvent company receives significantly less<\/a> value than it provides.\u00a0 An example is selling a company’s assets at prices far below their market value;<\/li>\n\n\n\n
  3. Extortionate Credit Transactions: <\/strong>Agreements that impose terms significantly harsher than those typically expected.\u00a0 These might include excessively high interest rates or unfair conditions; and<\/li>\n\n\n\n
  4. Invalid Floating Charges:<\/strong> These include security interests that are invalidated if granted during the insolvency twilight period and not backed by the new value provided to the company.<\/li>\n<\/ol>\n\n\n\n

    Timeframes for Voidable Transactions<\/h2>\n\n\n\n

    The law sets out specific periods during which certain transactions can be reviewed.<\/p>\n\n\n\n

    In relation to unfair preference payments, transactions made within six months before the onset of insolvency<\/a> can be challenged (two years if the creditor has a connection to the company).  <\/p>\n\n\n\n

    However, transactions at undervalue can be scrutinised if they occurred within two years before insolvency. <\/p>\n\n\n\n

    In contrast, floating charges created within 12 months of insolvency are subject to review (two years if the charge is granted to a connected party).<\/p>\n\n\n\n

    \n \"Front\n
    \n
    Company Registers<\/div>\n
    \n

    When you incorporate a company in England and Wales, you must maintain a number of company registers at its registered office or at the Companies House. This template includes these company registers.<\/p>\n <\/div>\n \n\nDownload Now<\/a> <\/section>\n <\/div>\n\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\n

    \n
    \n Need legal advice?\n
    \n \n Call     0808 196 8584<\/a> for urgent assistance.\n
    \n Otherwise, complete this form, and we will contact you within one business day.\n <\/span>\n <\/div>\n\n \n\n
    \n