Chapter 9 - Liquidators investigations

Question 1

S234/S235/S236

Answer 1

S234 - order to deliver up company property

S235 - obliges directors/officers/employees to co-operate with office holder

S236 - submit to examination under S236.

Powers for liquidators, administrators, administrative receivers and provisional liquidators/

Question 2

S238

Answer 2

Transactions at under value

Relevant time:
Unconnected person - 2 years
Connected person - 2 years

Insolvency required at time of transaction

Insolvency presumed if connected party

Question 3

What is the relevant time for transactions at under value for:
Unconnected persons
Connected persons

Answer 3

S238

Relevant time:
Unconnected person - 2 years
Connected person - 2 years

Question 4

Is insolvency presumed for transitions at at an undervalue for:
Unconnected persons
Connected persons

Answer 4

S238

Unconnected persons: Not presumed
Connected persons: Yes presumed

Insolvency required at time of transaction

Question 5

S239

Answer 5

Preferences

Relevant time:
Unconnected person - 6 months
Connected person - 2 years

Insolvency required at day of transaction - it is not presumed

Desire to prefer must be shown if unconnected. Is presumed if connected party

Question 6

What is the relevant time for preferences for:
Unconnected persons
Connected persons

Answer 6

S239

Relevant time:
Unconnected person - 6 months
Connected person - 2 years

Question 7

Preference claims:
Is insolvency required at date of transaction?
If so is it assumed?

Answer 7

S239

Yes - insolvency needs to be shown

It is not presumed

Question 8

Preference claims - what has to be shown?
Is is assumed in any case?

Answer 8

S239

Insolvency has to be shown - it is not assumed

Desire to prefer must be show, it is presumed if with a connected person

Question 9

Who are connected persons?

Answer 9

Husband, wife, partner, former partner or relatives of person or persons partner.

Relatives, siblings, uncles, aunts, nieces and parents and children

Question 10

S244

Answer 10

Extortionate credit transaction

Relevant time - three years (for WU this is from winding up order, not petition)

Do not need to show insolvency

It is assumed by court that transaction are extortionate and it is therefore left to the defence to prove this is not the case.

Question 11

What is the relevant time for extortionate credit transactions?

Answer 11

S244

3 years from winding up order (not petition)

Question 12

S245

Answer 12

Avoidance of floating charge

Floating charge on the company’s undertaking is invalid expect to extent of the aggregate of any fresh consideration given for it.

Unconnected party - 12 months, have to show insolvency
Connected party - 2 years, dont have to show insolvency

Question 13

What is the relevant time for avoidance of floating charge?

Answer 13

S245

Unconnected party - 12 months, have to show insolvency
Connected party - 2 years, dont have to show insolvency

Question 14

S423

Answer 14

Transactions defrauding creditors
Show that the intention was to put assets beyond reach of creditors or to prejudice their interests

Any time, don’t need to show insolvency

Question 15

S216-S217

Answer 15

Director of company in liquidation is prohibited from being a director of a company known by a prohibited name for a period of 5 years.

Director would be liable for all the debts of the new company

Question 16

What must a liquidator provide in order to bring a claim for S214?

Answer 16

Wrongful trading

• Company insolvent liquidation
• The person knew, or ought to have known that there was no reasonable prospect that the company would avoid insolvency
• Person was a director of the company at that time