preferred payment insolvency

[HWlton]

looking for some advice regarding an insolvency claim regarding preferred payment.

 

[Lee Green]

Feel free to give me a call

 

[Paul Kelly ICHYB]

If you ask a question, you might get advice!

 

[Newchodge]

Feel free to give me a call

The forum is for an exchange of ideas. Please offer advice or ask questions.

 

[Gyumri]

look up the relevant sections of the Insolvency Act 1986 and decide whether you believe the liquidator may be justified.

Preferential Payments: A 2026 Guide For UK Directors

Read our comprehensive guide around preferential payments to understand your legal options.

www.summitlawllp.co.uk

 

[Lisa Thomas]

Happy to add my opinion if you would like a second opinion after speaking with Lee. Feel free to dm me, or call my mobile.

 

[Elliot Green]

Key issue is a preference arises when it is a payment or benefit is given to a creditor who is put into a better position, subject to the company giving it, being influenced by a desire to give rise to that effect. (Section 239 of the Insolvency Act 1986)

 

[jimbof]

Key issue is a preference arises when it is a payment or benefit is given to a creditor who is put into a better position, subject to the company giving it, being influenced by a desire to give rise to that effect. (Section 239 of the Insolvency Act 1986)

I'd never read the Act, thanks for sharing. It's interesting as the highlighted portion would seem to be a huge get-out (how do you prove the desire was to put them into a better position?). I see it is assumed automatically to be true though if they are connected to the company other than by virtue purely of being an employee, unless there is clear proof they weren't influenced.

 

[Lisa Thomas]

I'd never read the Act, thanks for sharing. It's interesting as the highlighted portion would seem to be a huge get-out (how do you prove the desire was to put them into a better position?). I see it is assumed automatically to be true though if they are connected to the company other than by virtue purely of being an employee, unless there is clear proof they weren't influenced.

Exactly. It's pretty much a slam dunk where Directors have preferred themselves.

 

[louis292]

looking for some advice regarding an insolvency claim regarding preferred payment.

It usually comes down to whether the company was already insolvent when the payment was made and if there was a clear 'desire to prefer' that specific creditor.

 

[louis292]

I'd never read the Act, thanks for sharing. It's interesting as the highlighted portion would seem to be a huge get-out (how do you prove the desire was to put them into a better position?). I see it is assumed automatically to be true though if they are connected to the company other than by virtue purely of being an employee, unless there is clear proof they weren't influenced.

Proving that "desire to prefer" is notoriously tricky in court when dealing with unrelated third parties. Usually, liquidators have to rely on circumstantial evidence—like a sudden change in regular payment terms, or paying off a specific supplier while ignoring critical utility bills. It rarely comes down to a smoking gun email; it's almost always about looking at the company's behavior right before everything collapsed.

 

[Newchodge]

Proving that "desire to prefer" is notoriously tricky in court when dealing with unrelated third parties. Usually, liquidators have to rely on circumstantial evidence—like a sudden change in regular payment terms, or paying off a specific supplier while ignoring critical utility bills. It rarely comes down to a smoking gun email; it's almost always about looking at the company's behavior right before everything collapsed.

Or paying a debt which is subject to a personal guarantee

 

[UK Contractor Accountant]

what time frame is the look back window?

1yr?

 

[UK Contractor Accountant]

Have a read of the Judgements in this case:

Manolete Partners Plc v Coleman & Ors [2022] EWHC 2644 (Ch)

 

[Lisa Thomas]

what time frame is the look back window?

1yr?

6 months pre insolvency for unconnected parties, 2 years for connected parties re an illegal preference..

No deadline for misfeasance under S212 though...

 

[Elliot Green]

I'd never read the Act, thanks for sharing. It's interesting as the highlighted portion would seem to be a huge get-out (how do you prove the desire was to put them into a better position?). I see it is assumed automatically to be true though if they are connected to the company other than by virtue purely of being an employee, unless there is clear proof they weren't influenced.

You might want to have a look at Re MC Bacon Ltd [1990] BCLC 324.