Voidable transactions Flashcards
Who may bring a claim for a voidable transaction?
liquidator or administrator
Name the 4 types of voidable transactions
- TAU
- preference
- avoidance of floating charge
- TDC
What is the relevant time to bring claim for TAU? State for unconnected and connected person
unconnected = 2 years
connected = 2 years
What is the relevant time?
The time from the transaction to the onset of insolvency
What is the relevant time to bring claim for preference? State for unconnected and connected person
unconnected: 6 months
connected: 2 years
What is the relevant time to bring claim for avoidance of floating charge? State for unconnected and connected person
unconnected: 12 months
connected: 2 years
What is the relevant time to bring claim for TDC?
no relevant time - the more recent since transaction the better
What must be proved to establish a preference transaction to unconnected person? (2)
A desire to prefer + insolvency
What must be proved to establish a preference transaction to connected person?
insolvency
What type of test is the “desire to prefer”?
subjective
What is a defence to TAU? (2)
- good faith
- reasonable grounds for believing it would benefit the company
What is the restoration order for avoidance of floating charge?
security is void but not the debt
What are the 2 types of transactions where insolvency is not required at the date or as a result of transaction?
- Avoidance of floating charge - connected person
- TDC
What are the 2 types of transactions where a presumption is available?
- TAU - connected (insolvency)
- preference - connected (desire to prefer but not insolvency)
Who can a claim for fraudulent trading be brought against? Any person…(2)
i. knowingly party to the carrying on of business
ii. with intent to defraud
What must be proved for a successful fraudulent trading claim?
Dishonesty:
i. subjective state of mind
ii. objective standard of ordinary decent people
What remedies are available for fraudulent/wrongful trading? (3)
- Compensatory – court discretion
- Disqualification order
- Criminal sanctions
Who can a claim be brought against for wrongful trading?
Director at relevant time (all forms)
What must be proved for a successful claim in wrongful trading? (2)
- insolvency - at no point of return - director knew or ought to have known = objective/subjective test
- continued trading and made company’s position worse
What is a possible defence a director can raise for wrongful trading? Name an example
- Took every step with view to minimising potential loss
- Voicing concerns at BM and proof in minutes
