Transactions at Undervalue (‘TUV’) Claims - An Introduction for Insolvency Professionals

Introduction

A common occurrence in corporate and personal insolvency is the review of transactions the person or company made prior to their insolvency.

The purpose for conducting such reviews is to discover whether the individual made any transactions which could be impugned under the Insolvency Act 1986 through one of its antecedent transaction provisions.

The most common type of claim arising from antecedent transactions is that for ‘transactions at an undervalue,’ or TUVs, which consist of the disposal of property or assets for no or limited consideration.

These are often found in family situations where a bankrupt transfers an asset to his/her family shortly before a bankruptcy petition is presented.

If proven, the Court has the power to return the asset or its worth in money to the insolvent estate.

TUV 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, TUV 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 transaction at an undervalue?
• What is a ‘transaction,’ and how is it valued
• Common types of transaction in both corporate insolvency
• Common types of transaction in personal bankruptcy including issues of marriage/civil partnership
• The relationship to claims under s.423 Insolvency Act 1986
• The ‘relevant time’ in which TUVs can be given by an insolvent entity and the need to prove insolvency
• The different relevant times in corporate and personal insolvency
• The relation of the relevant time to the period for void dispositions under s(s). 227 and 284
• The need to prove insolvency at the time of the transaction - presumed insolvency versus having to prove it on the cash-flow or balance-sheet tests
• 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
  • Corporate insolvency - the relevance of good faith and commerciality
  • Does the change of position defence exist for TUVs - current cases
• Limitation issues

This webinar was recorded on 19th October 2021