BL - Insolvency individual

Question 1

A Trustee has the power to challenge voidable transactions and will do this with the aim of increasing the assets available to creditors. What are the voidable transactions?

Answer 1

• Transactions at an undervalue 🎁
• Preferences 😚
• Transactions defrauding creditors 👺

Question 2

What is a Transaction At an Undervalue?

Answer 2

• a gift
• consideration below M.V.

Question 3

At what time can a Transaction At an Undervalue occur?

Answer 3

Within 5 years preceding the day of the presentation of the bankruptcy petition

Question 4

Is insolvency required for a Transaction At an Undervalue?
🎁

Answer 4

• Not for 0 - 2 years
• required for 2 - 5 years

(There is no intent required for TUV)

• Insolvency is presumed if where the transactions was with an associate.

Question 5

What is Preference?
😚

Answer 5

A creditor is put in a better position than they would have been if the individual had been made bankrupt.

Requires:

• insolvency

AND

• intention

Question 6

When must Preference occur?

Answer 6

• Unconnected person - Within 6 months preceding the day of the presentation of the petition
• Connected person - within 2 years preceding the day of the presentation of the petition.

Question 7

Is insolvency required for Preference?

Answer 7

Yes

It must be proved that the individual was insolvent at the time of the preference or became insolvent as a result of it.

Question 8

What is the motive requirement of Preference?

Answer 8

• desire to prefer the creditor.

There is a rebuttable presumption that the bankrupt individual was influenced by the desire to prefer the creditor where the preference is to an associate

Question 9

What is Transactions Defrauding Creditors ?
👺

Answer 9

• a transaction at an undervalue 🎁

WITH

• an intent to defraud creditors 👺

Question 10

At what time can a Transactions Defrauding Creditors occur?

Answer 10

• no time limit

therefore a Trustee is most likely to bring a TDC claim when they are outside the time limits for a transaction at an undervalue claim.

Question 11

Is insolvency required for Transactions Defrauding Creditors?

👺

Answer 11

No

Question 12

What is the motive requirement of a Transaction At an Undervalue?

🎁

Answer 12

None

Only requires insolvency

Question 13

When is insolvency presumed for an individual TUV?

Answer 13

If the TUV is to a connected party

(There is no need for intent for a TUV for individuals)

Question 14

What is the effect of a TUV to a connected party?

Answer 14

• assumed insolvent so can go back 5 years