The concept of a transaction at an undervalue also appears in s 423, discussed in Chapter 10. In Re Fowlds [2021] EWHC 2149 (Ch), [2022] 1 W.L.R. 61 Trower J opined that some care has to be taken in transposing the principles established by the cases on section 423 of the Act into the context of a statutory clawback claim under section 339 or section 340 of the Act. It may be more appropriate in a s 423 case to carry out a balancing exercise between the interests of the creditors or victims of the transferor on the one hand and the transferee on the other. This approach was echoed by Singh LJ, who gave the leading judgment in the Court of Appeal in Invest Bank PSC v El-Husseini and others [2023] EWCA Civ 555, [2024] K.B. 49, paras 86-87. There were differences between ss 238 and 339 and s 423, since s 423 has a longer lookback period. Also, s 423 does not only apply in insolvencies, and so does not require precise meaning of “property” which falls within the bankrupt person's estate. There may also be defences under ss 238 and 339 which do not apply in s 423. Moreover the “purpose” provision in section 423(3) has no counterpart in sections 238 and 339 and is important to the interpretation of s 423 as a whole.

In Sleight v The Crown Estate Commissioners [2018] EWHC 3489 (Ch) it was therefore held that a trustee in bankruptcy, who had disclaimed two freehold properties did not have standing under section 320(2)(a) of the Insolvency Act 1986 to apply to court at a later date for a vesting order in relation to those properties, nor in relation to the surplus arising from their sale by a mortgagee.

In Frosdick v Fox and another [2017] EWHC 1737 it was held that a bankrupt is not entitled to serve on his or her trustee in bankruptcy a notice putting the office holder to election.

See now however Re MKG Convenience Ltd i[2019] EWHC 1383 (Ch), [2019] B.C.C. 1070, where it was held that although a change of position defence was in principle available, the circumstances in which it could succeed were constrained in the same way and for the same reasons as the exercise of the court's discretion to validate. Therefore account would be taken of whether the disposition was beneficial for the company's creditors generally.

This case was followed in Re Changtel Solutions UK Ltd [2022] EWHC 694 (Ch), and Rose v AIB Group (UK) plc was not followed.

See also, Officeserve Technologies Ltd (in liquidation) and another v Annabel's (Berkeley Square) Ltd and others [2018] EWHC 2168 (Ch), paras 17, 37-43.

See also Re Ahmed [2018] EWCA Civ 519 it was held the word 'restitutionary', as used in the authorities, meant restoring trust property 'actually lost as a result of the breach of trust'. The court should identify (a) what constitutes the breach of trust; (b) when it occurred; (c) the loss actually caused to the estate. Compensatory relief, in addition to the restoration of trust property, is available where the claimant beneficiary can establish a loss to the estate caused by the trustee's breach of trust.

See now Officeserve Technologies Ltd (in liquidation) and another v Annabel's (Berkeley Square) Ltd and others [2018] EWHC 2168 (Ch).

Ignorance on the part of the person receiving the disposition does not provide an exception to s 127: see, Officeserve Technologies Ltd (in liquidation) and another v Annabel's (Berkeley Square) Ltd and others [2018] EWHC 2168 (Ch), 17.

It is not relevant that the person receiving the disposition did so in good faith: see, Officeserve Technologies Ltd (in liquidation) and another v Annabel's (Berkeley Square) Ltd and others [2018] EWHC 2168 (Ch), para 17.

See also the modification made under the the Corporate Insolvency and Governance Act 2020 c. 12 Sch. 3 para.12, discussed at 3.02, which added subsection (3) to protect transactions during a restructuring moratorium.

See also however s 127(3), inserted by the Corporate Insolvency and Governance Act 2020 c. 12 Sch. 3 para.12, June 26, 2020. This subsection protects dispositions made during a restructuring moratorium under IA 1986, Part A1. It provides that s 127 has no effect in respect of anything done during a moratorium, or during a period mentioned in section 5(4)(a) following the end of a moratorium, where the winding-up order was made on a petition presented before the moratorium begins, unless the petition was presented under section 367 of the Financial Services and Markets Act 2000 on the ground mentioned in section 367(3)(b) of that Act.

See Manning v Neste AB (Re Bitumina Industries Ltd) [2022] EWHC 2578 (Ch).

See also Manning v Neste AB (Re Bitumina Industries Ltd) [2022] EWHC 2578 (Ch) where it was also held that that the point at which consideration is provided should not be determined by reference to technical contract law principles, but rather by reference to the point at which assets or resources are made available to the company, and its resources are increased accordingly. Accordingly (at para 56) 'if a financing proceeds in three stages; first the making of an agreement to provide finance and to grant a charge, second the granting of the charge, and third the payment over of the promised financing, the requirements of s.245 would be satisfied even though neither the making of the payment nor the granting of the charge would, in contractual terms, constitute "consideration".'

See Crumpler and another (Liquidators of Peak Hotels and Resorts Ltd) v Candey Ltd [2019] EWCA Civ 345.

In Manning v Neste AB (Re Bitumina Industries Ltd) [2022] EWHC 2578 (Ch), para 73 the court held that the term 'goods' in this context 'should encompass not only goods in the Sale of Goods sense, but also things in action (such as money receivables) and intangibles (such as intellectual property) which are of a kind which (a) are received by the Company pursuant to its ordinary trading activity and (b) have a clear value, such that transfer of their ownership to the Company necessarily swells the assets of the company."

In Grant v Baker [2016] [2016] EWHC 1782 (Ch) the High Court confirmed that an order for sale of a property should be made in a matter of months unless there are truly exceptional circumstances.

In Lyle v Bedborough [2021] EWHC 220 (Ch) no exceptional circumstances were found where the bankrupt's spouse had physical pain issues, the family home was close to school and the spouse would be unable to afford a similar size property . Account was however taken of these factors in deciding the timescale within which to order a sale.

Maxine Reid-Roberts and another v Hsiao Mei-Lin & Anor [2024] EWHC 759 is an unusal case where the equities lay with the family of the bankrupt and not with the creditors of his insolvent estate due to the exceptional circumstances. The husband had not disclosed the existence of the bankruptcy proceedings and had manufactured a situation whereby the bankruptcy order was made (and his interest in the former matrimonial home thus passed to his trustees in bankruptcy) before a property adjustment order was made in favour of the wife. The court held it was not just and reasonable to make an immediate possession order; no great hardship would be suffered by creditors.

In Carter v. Hewitt [2019] EWHC 3729 (Ch) the debtor owned the property outright, so s 335A was not applicable.

In Sands and another v Singh and others [2015] EWHC 2219 (Ch) the office holder had applied for possession but the court had not issued the proceedings until after the prescribed three-year "use it or lose it" period. It was held that the rights over the bankrupt's home had not bee lost.

A proprietary estoppel finding was made in Brake and others v Swift and another [2020] EWHC 1810 (Ch). Here there was a promise made or expectation created about the future legal position. This promise was intended to be relied on and was relied on by another person to his detriment. That claim was to a recognised property right enabling the applicants to occupy a dwelling-house which was their home at the date of their bankruptcy. However it was not the sole or main residence and s 238A did not apply.

For a recent failed attempt to claim proprietary estoppel where an interest of a spouse in matrimonial property had been varied without correct formalities see Nilsson & Anor v Iqbal & Anor [2024] EWHC 49 (Ch).

If the bankrupt does not inform the office holder of their interest in the property within three months from the bankruptcy, the three-year period only begins with the date on which the office holder becomes aware of the interest. In Re Khilji (In Bankruptcy) [2023] EWHC 298 (Ch), the High Court considered the meaning of when a trustee in bankruptcy "becomes aware" of a bankrupt's interest in a family home. must either be actively informed by the bankrupt of their interest in a family home, or otherwise actually become aware of that interest. Time does not start running if the trustee is merely on notice of a potential claim on the property. However the office holder does not need to have actual knowledge of an actual interest. In the absence of express notification, an office holder is not considered to have 'become aware' of an interest if that awareness relies on certain (not necessarily logical) inferences that must be made from an assortment of facts pertaining to a bankrupt’s involvement in a property

In Constandas v Lysandrou (a protected party by her litigation friend and son Mr Michael Lysandrou) and others [2018] EWCA Civ 613, the Court of Appeal upheld a decision that had been based on the burden of proof. The claimant contended that he had contributed sums to the purchase price of a property. The burden of proof was on the claimant. The judge had made efforts to make a finding on the evidence and had only resorted to the burden of proof where this was not possible. The claimant had not made his case.

See also Maxine Reid-Roberts and another v Hsiao Mei-Lin & Anor [2024] EWHC 759.

In Milne, Liquidator of Premier Housewares (Scotland) LLP v Rashid [2018] CSOH 23, the Scottish Court of Session confirmed that where an insolvent entity fails the balance sheet test it will still be deemed to be unable to pay its debts under section 123 of the IA 1986, even if it is considered to be solvent on a cash flow basis.

In Avery-Gee v Thompson and others (Re Whitestar Management Ltd) [2018] EWHC 743 (Ch) an order was made against a person who was not a party to the transaction at an undervalue. A buyer of assets from the company, W, paid part of the purchase price to T, who was a creditor of W's sole shareholder. This was done at W's direction. W later went into administration the liquidation. The liquidator challenged the payment to T. The transaction had been at a relevant time and also at an undervalue because consideration received by W was less than its true value because W had directed that purchase monies should be paid to T. The court rejected the claim that T could benefit from the protection given to third parties in section 241(2)(a) of the IA 1986 “in good faith and for value”. Here T would be presumed not to be acting in good faith if he had notice of “the relevant surrounding circumstances and of the relevant proceedings”. The presumption of bad faith in s 238(2A) did not apply as W had not been in administration at the time of the payment. However as a matter of fact T had acted otherwise than in good faith and he also could not benefit from the protection in section 241(2)(a).

See also Avery-Gee v Thompson and others (Re Whitestar Management Ltd) [2018] EWHC 743 (Ch) discussed in an annotation to para 190 above.

Such cases will however be very rare. See Re Fowlds [2021] EWHC 2149 (Ch), [2022] 1 W.L.R. 61 per Trower J, discussed in an annotation to 5.117.

See also Fastfit Station Ltd (In Liquidation) [2023] EWHC 496 (Ch), [2023] B.C.C. 663 (payment made at the direction of the company, even if not directly by it).

However see also Fastfit Station Ltd (In Liquidation) [2023] EWHC 496 (Ch), [2023] B.C.C. 663, where this defence was not made out. A tyre fitting company had given notice of intention to appoint an administrator. It was getting ready for a prepack sale and arranged for customer payments to be made to the prepack purchaser, a newco. There was evidence of a wish to maintain goodwill with some creditors. However the s 238(5) defence was not made out. Other creditors had not been considered and the company's bank account was not frozen for some of the period when these paymetns were made, so it could have received the payments.

See also Fastfit Station Ltd (In Liquidation) [2023] EWHC 496 (Ch), [2023] B.C.C. 663 (payments made at the direction of a transferor company prior to a prepack sale, where the company gained no benefit from the payments as they went to the prepack purchaser).

In Manolete Partners Plc v Coleman [2022] EWHC 2644 (Ch),[2023] B.P.I.R. 460 one defendant was able to rebut the presumption of 'influence...by a desire', on the balance of probabilities. The company had paid him £15,000 and the company had also paid a creditor, FCTL which had the effect of relieving him from a guarantee liability. Other necessary grounds under s 239 were present and 'influence...by a desire' was the key issue. At the time when the payments were made he had believed that all creditors would be paid in full. It was held that the company had a desire to confer a benefit on him as the recipient of the £15,000 and as a guarantor of the liability to FCTL but not to improve his position in an insolvent liquidation.

The defendant had an accountancy background and his evidence was approached with scepticism. He was however regarded as a reliable witness. His approach was regarded as 'pretty cavalier' and his belief had been based on 'his rough and ready assessment without feeling the need to check the figures' and on the facts. However he had not been able to readily access company records for a time. At the time when the payments had been made his mind was set that all creditors would ultimately be paid.

Another defendant had not provided evidence to rebut the presumption and was ordered to restore the position to what it would have been had the preference not been given.

This may be particularly difficult in large company insolvency proceedings as establishing "desire" will depend on a decision having been made at an appropriate level of authority. A first instance finding of a preference was unanimously overturned by the Court of Appeal in Darty Holdings SAS v Carton-Kelly [2023] EWCA Civ 1135, [2024] B.C.C. 119. Comet had repaid an intercompany loan as a condition to the completion of the sale of its shares to a third party. The timing of the decision by Comet was critical because it determined whether or not it had the requisite desire to prefer for the purposes of s239(5) IA 1986. The court found that the judge at first instance had erred in finding that the decision to make the payment was taken in November 2011 when the share purchase agreement was entered into, rather than at the meeting of Comet’s board in February 2012. The judge had found the SPA to be prescriptive of what Comet would be required to do under its terms, and that the hands of the new board were effectively tied by the time of the February meeting, There was however a difference between an expectation that the board would so act and the board taking the decision to do so. There was also evidence that the board did not consider that their hands were tied.

None of the directors at the time of that board meeting had been influenced by a desire for the purposes of s 239. Therefore the conditions of s 239 were not satisfied.

The judge had also placed too much emphasis on the role of Comet's general counsel, "E". The judge’s inference that the board was content to enter into a transaction decided upon by E could not be supported, given E's role and scope of authority.

Re De Weyer Ltd [2022] EWHC 395 (Ch) the court considered obiter that an honest but mistaken belief that a creditor is secured would be sufficient to exclude the presence of a desire to prefer. On the facts, the court concluded that the director did not in fact believe that the loan was validly secured when the repayment was made and it made an order for restoration of monies to the company.

In Ingram (Liquidator of MSD Cash & Carry Plc) v Singh [2018] EWHC 1325 (Ch) [2018] B.C.C. 886 it was held that the time when the preference is given is the time for assessing whether the company was influenced by a desire to produce the relevant effect in deciding to give the preference, and in applying the presumption under s.239(6) (applying the decision in Re Idessa (UK) Limited (in liquidation) [2011] EWHC 804 (Ch).

See also Re Fowlds [2021] EWHC 2149 (Ch), [2022] 1 W.L.R. 61 per Trower J, "where a court is concerned with the appropriate relief to be granted in a preference or transaction at an undervalue claim, it will rarely be possible to give weight to a change of position by the preferee or the transferee, while at the same time honouring the policy which is reflected in the statute, the normal operation of the statutory insolvency scheme and the restorative nature of the relief (if any) it is required to grant". Claridge's Trustee in Bankruptcy v Claridge [2011] EWHC 2047 (Ch) (where account was taken of the defendant’s change of position, having in good faith spent monies received under the undervalue transaction) was considered (para 93) to probably be a rare case where a change of position defence might have applied.

Directors duties to have regard to the interests of creditors were considered by the Supreme Court in BTI 2014 LLC v Sequana SA and others [2022] UKSC 25. This was a case which concerned whether there had been a breach of duty where a large dividend had been paid by a company to its only shareholder at a time when the company was solvent but had some long-term contingent liabilities in respect of environmental clean-up operations in the United States, the extent of which were uncertain, but which gave rise to a real risk, although not a probability, that it might become insolvent at an uncertain but not imminent date in the future. As it turned out, the environmental liabilities were much greater than originally estimated and AWA entered into insolvent administration in 2018. The appellant, BTI 2014 LLC, sought, as assignee of AWA’s claims, to recover from AWA’s directors the amount of the dividends paid out on the basis that their decision for the distribution of the dividends was in breach of the duty to act in good faith in the interests of the company, as it applies in s 172(3).

The majority of the Justices of the Supreme Court in Sequana held that account should be taken of the interests of creditors where “the directors know, or ought to know, that the company is insolvent or bordering on insolvency or that an insolvent liquidation or administration is probable”, rejecting some broader approaches that had been based on risks of insolvency. They ruled that there was no standalone “creditor duty” per se, even if that term has commonly been used by those who have written about the case, but rather the duty is merely the extension or an adjustment of the ordinary fiduciary duty of directors to act in the interests of the company.

The defendant in Fastfit Station Ltd (In Liquidation) [2023] EWHC 496 (Ch), [2023] B.C.C. 663 had argued that this defence should apply as he had obtained legal advice prior to entering into the transactions that fell foul of s 238. However this advice had been given during relatively informal conversation prior to the filing of the notice of intention to appoint. Subsequent steps should also have been raised with the lawyers.

Followed in the s 423 case of in Burnden Holdings (UK) Ltd (in liquidation) v Fielding [2019] EWHC 1566 (Ch), see paras 501-507.

In Akhmedova v. Akhmedov [2021] EWHC 545 (Fam), 103 Mrs Justice Knowles rejected the argument that there is an additional "gateway" requirement that a transaction cannot be set aside under s 423 if the debtor has enough assets post-transaction to satisfy the debt in question. This gateway condition is absent from the plain wording of statute. Such a gateway would also have the effect of prejudicing creditors’ interests in circumstances where the debtor's purpose was entirely consistent with section 423(3).

See also BTI 2014 LLC v Sequana SA [2019] EWCA Civ 112 , discussed in an annotation to para 10.23.

Purkiss v Kennedy and others [2024] EWHC 1081 (Ch) concerned a tax avoidance scheme. The liquidator argued that the court should infer that the scheme had been been entered into for the purpose of putting assets beyond the reach of HRMC. The court however held that the liquidator had to show that a purpose of the company in setting up the scheme was that, if it failed, its implementation would nevertheless impede HMRC from recovering tax due to HMRC. However, there was no evidence on the facts of any such intention.

Purpose was also discussed at first instance in BTI 2014 LLC v Sequana SA [2019] EWCA Civ 112 the Court of Appeal upheld Rose J's finding that the payment of a dividend was held to fall under s 423. The company had on its balance sheet a prospective long term liability for an environmental clean up operation. The dividend had been paid to remove from a group the risk that a possible indemnity liability might turn out to be greater than the amount available to meet it. The Court of Appeal confirmed that a dividend could be a transaction. Rose J had held that it was not necessary to show that the directors 'acted in bad faith in the sense of having engaged in sharp practice or recklessness' that the directors had the subjective intention of moving assets beyond the reach of creditors. The Court of Appeal confirmed that there was no requirement under s 423 to show to show dishonesty or ill will towards creditors by the directors. This aspect of the case was not appealed although the Supreme Court decision [2022] UKSC 25 includes some discussion of s 423. 

Note however that the approach in s 423 is broader and therefore the courts have more recently been cautious in applying principles from s 423 into cases under ss 238 and 339: In Re Fowlds [2021] EWHC 2149 (Ch), [2022] 1 W.L.R. 61, para 69 per Trower J. It may be more appropriate in a s 423 case to carry out a balancing exercise between the interests of the creditors or victims of the transferor on the one hand and the transferee on the other. This approach was echoed by Singh LJ, who gave the leading judgement in the Court of Appeal in Invest Bank PSC v El-Husseini and others [2023] EWCA Civ 555, [2024] K.B. 49, paras 86-87. There were differences between ss 238 and 339 and s 423, since s 423 has a longer lookback period. Also, s 423 does not only apply in insolvencies, and so does not require precise meaning of “property” which falls within the bankrupt person's estate. There may also be defences under ss 238 and 339 which do not apply in s 423. Moreover the “purpose” provision in section 423(3) has no counterpart in sections 238 and 339 and is important to the interpretation of s 423 as a whole.

In Lemos v Church Bay Trust [2021] EWHC 1173 (Ch) an application had been commenced previously by an alleged victim of a transaction defrauding creditors. The trustees in bankruptcy did not initially have funds to commence the case but it needed to commence then for the continuance of asset freezing and asset preservation orders. The claimant victim did so representing all creditors. The trustees in bankruptcy subsequently obtained funds and applied to join the case.

The court held that this it was desirable for the trustees in bankruptcy to be joined as recovery made would be for the benefit of all creditors. The trustees, as office holders, were the most appropriate persons to prosecute the claim. The trustees could actively assist the court as an interview that they had conducted with the debtor would be significant evidence in support of the claim. The court also considered that the trustees would be more fully engaged as parties to the proceedings than as witnesses. In the existing proceedings, the victim claimant and one of defendants were respectively sister and wife to the debtor, therefore the case had a certain fragility and the joinder of trustees as independent office holders would protect against the risks inherent in that. It was the duty of the trustees to press on with collecting in the assets of the debtor's estate and they were likely to bring a renewed vigour to the proceedings and a different perspective.

In In Stephen John Hunt (Liquidator of Marylebone Warwick Balfour Management Ltd) v Richard Balfour-Lynn and others [2022] EWHC 784 (Ch) the court considered whether a tax avoidance scheme was a transaction defrauding creditors. The court, following JSC BTA Bank v Ablyazov [2018] EWCA Civ 1176, noted that 'purpose' is distinct from 'consequence'. Under the tax avoidance scheme it was a consequence that assets were put out of reach of HMRC. That was a consequence but not a purpose of the scheme. The defendants had had no interest in making, and would not have made, payments under the scheme if they had not believed that it was likely to be legitimate. They had acted under professional advice. Therefore if directors have obtained and followed appropriate professional advice in seeking to minimise tax, it may be difficult for liquidators, in the event of a subsequent liquidation, to successfully argue that the directors were doing so for the purpose of putting assets beyond the reach of creditors.

In Cage Consultants Ltd v Iqbal (Re Totalbrand Ltd) [2020] EWHC 2917 (Ch) the liquidator had assigned various claims. The defendant argued that the case should be stayed or dismissed on the basis that section 246ZD allowed the transfer of a claim but did not amend the identity of the person to whom an award could be made under the relevant sections. The section applied to the company or the liquidator. This claim was unsurprisingly unsuccessful. An assignment under section 246ZD carried with it the proceeds of the claim transferred and 246ZD required a purposive, not a literal, interpretation, so as to allow an assignee to benefit from any order of the court under the relevant sections. Were this not so it would render section 246ZD futile. There would be no incentive for assignees, if all that they stood to gain was the possibility of their litigation costs back, and the risk of incurring an adverse costs order. It would also defer the dissolution of the relevant company for no concrete reason and with a possible consequent increase in the cost of the insolvency proceedings.

See also the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments (2018) and the UNCITRAL Model Law on Enterprise Group Insolvency with Guide to Enactment (2019). At the time of writing both were awaiting initial adoptions.

The law cited in footnote 69 has not been amended post Brexit. IA 1986, s 1 and Sch B1, para 111 set out the criteria for companies which can be placed in administration (as well as those which can propose a CVA). Pre-Brexit and during the transition period there was no basis to open administration in respect of a company with its COMI in the EU if the company had no establishment in the UK. This was the effect of the EU Regulation. Post-Brexit and post-transmission period the Regulation no longer applies. Para 111 can therefore be read as enabling an administration appointment to be made in respect of an EEA (including EU) domiciled company even if it has no establishment in the UK. In practice this may not be signfiicant as any court would want to be satisfied that there was a "sufficient connection" with the UK, as discussed later in the text. There may also be no practical benefit if there is no establishment in the UK.

Differences in preference laws are however notable.

For a survey of avoidance provisions in each of the EU jurisdictions as well as the UK see Reinhard Bork and Michael Veder, Harmonisation of Transaction Avoidance Laws (Intersentia, 2022)

Hotchpot

In fact most approaches are some version of modified universality, approaches that tend to be both successful and pragmatic. See Irit Mevorach, The Future of Cross-Border Insolvency: Overcoming Biases and Closing Gaps (OUP 2018).

See also now the UNCITRAL Model Law on Enterprise Group Insolvency with Guide to Enactment (2019), available at https://uncitral.un.org/en/MLEGI. It is in the nature of this type of instrument that adoptions will be slow.

Were formerly.

No measure equivalent to the EU Regulation is now in place. The UK has the Cross Border Insolvency Regulations but most EU jurisdictions do not. Much will therefore depend on private international law rules of the member states.

A harmonising directive has been proposed by the European Commission: see Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL harmonising certain aspects of insolvency law, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52022PC0702 The treaty basis for this proposed directive is Article 114 which supports the internal market. The concern is that that lack of harmonised insolvency regimes has been identified as one of the key obstacles to the freedom of capital movement. Arguably these concerns would preferably be addressed with less disruption if clear capital markets exceptions had been created. Suitable exceptions would arguably more effectively target the laws in a way that would give confidence in cross border capital transactions, particularly as the proposals for harmonisation are only partial, as discussed below.

Many voidable transactions will be by smaller enterprises and may have no EU dimension and confining the harmonised laws to transactions with a cross border effect has been persuasively suggested by Oriana Casasola, The Harmonization of Transaction Avoidance in the EU, Edward Elgar, 2023.

Under the proposed Directive, however, there are proposals for common rules in relation to preferences, transactions for manifestly inadequate consideration, and legal acts that are intentionally detrimental to creditors. Other grounds for avoidance can still be included in the laws of member states. As this book highlights, there are many ways in which transactions, or their effects, can be neutralised.

See also Orexim Trading Ltd v Mahavir Port and Terminal Private Ltd [2018] EWCA Civ 1660.

A "transaction" for the purposes of s 423 can be entered into even if the assets that are transferred are not the debtor's beneficial property. It includes therefore a transaction where a debtor enters into a transaction with a third party, even if the act is that of a company that the debtor controls. Were this not the case it would be easy to evade the scope of s 423 e.g. through using a limited company. It is important not to interpret ss (1) in a way that would defeat the purpose of s 423. Invest Bank PSC v Ahmad Mohammad El-Husseini & Ors [2023] EWCA Civ 555, distinguishing Clarkson v Clarkson [1994] BCC 921 (CA), a case on s 339, where it had been held that a transaction must involve the giving away of property which would otherwise have formed part of the debtor’s bankruptcy estate.

In Invest Bank PSC v Ahmad Mohammad El-Husseini & Ors [2023] EWCA Civ 555, para 61 it was noted that this definition is a non-exhaustive one on its face and also that the words "arrangement or agreement" are broader than "gift" and should not be restrictively construed.

Including that the correct formalities for any variation in the interests held have been complied with: see e.g. Nilsson & Anor v Iqbal & Anor [2024] EWHC 49 (Ch).