Definition
A transaction at an undervalue is any transaction entered into with another that involves a gift or transfer for no consideration. The value received by the company is significantly less than money or money's worth.
Defence
- That the transaction was entered into in good faith; and
- There were reasonable grounds for believing it would benefit the company.
Relevant Time
The transaction must have taken place at a relevant time. For a time to be relevant:
- The company must have been insolvent at the time of the transaction; and
- The transaction must have taken place within two years of the "onset of insolvency"
NB: Where the recipient of a transaction is a connected person, insolvency is presumed.
Preferences
Definition
The person preferred must be a creditor, guarantor or surety. The company must 'do anything' or 'suffer anything' to be done which puts that creditor, guarantor or surety in a better position in the event of insolvent liquidation than they would otherwise have been in.
The company must have been influenced by a desire to prefer.
Defence
Absence of "desire"
Relevant Time
The preference must have been given at a relevant time. For a time to be relevant:
- The company must have been insolvent at the time of the preference;
- Preference must have been given within six months of the onset of insolvency; or
- When the parties are connected:
- The relevant time is two years
- Insolvency is NOT presumed as it is with a transaction at an undervalue
- 'desire' is presumed
For further advice and assistance regarding any aspect of the above insolvency procedure, please contact BRI. We will discuss, free of charge, any further implications and alternatives with you. |
