Claims for Preferences - An Introduction for Insolvency Professionals

Introduction

One of the most regular claims brought in personal and corporate insolvency involves claims to reverse payments to creditors deemed to preferences, i.e., payments to particular creditors in preference to others. These types of claims fill a significant portion of specialist insolvency lawyers’ work.

Preference claims appear in personal and corporate insolvencies, and are largely the same, although there are some subtle differences between the two. The defences to these claims are largely technical and based upon the statutory definitions, and a knowledge of the particular defences is essential to either running a claim or defending one.

While some causes of action arising from insolvency, such as for wrongful trading, have been suspended due to the COVID-19 pandemic, preference claims continue to be available, and will continue to be sought by trustees in bankruptcy and liquidators on a regular basis.

What You Will Learn

This webinar will cover the following:

• What is a preference payment to a creditor in personal and corporate insolvencies?
• The position of the creditor relative to what would happen in the insolvency
• The issues of control and value
• The relationship with court orders and matrimonial cases
• The ‘desire to prefer’ on the part of a bankrupt or a company
• How does the Insolvency Act presume a desire to prefer in certain situations?
• How a practitioner should structure their case when approaching the issue of a ‘desire to prefer’ - how to evidence the matter
• The ‘relevant time’ in which preferences can be given by an insolvent person
• The relevant time in corporate insolvency
• The relevant time in personal insolvency
• The relation of the relevant time to the period for Void Dispositions under s(s). 227 and 284
• Potential orders for relief
• The Court’s unfettered discretion to make an order or not
• Manner of restitution which the Court might order - the calculation of loss
• Defences
• Challenges to statutory conditions
• Relation to defences in Transaction at Undervalue cases
• Does the change of position defence exist for preferences - current cases
• Limitation issues

This webinar was recorded on 12th October 2021