Scotland: antecedent transactions by corporate debtors
Produced in partnership with Tim Cooper and Emma Widdowson of Addleshaw Goddard LLP
Scotland: antecedent transactions by corporate debtors

The following Restructuring & Insolvency guidance note Produced in partnership with Tim Cooper and Emma Widdowson of Addleshaw Goddard LLP provides comprehensive and up to date legal information covering:

  • Scotland: antecedent transactions by corporate debtors
  • Unfair preferences
  • Gratuitous alienations

Sections 242 and 243 of the Insolvency Act 1986 (IA 1986) govern the two main antecedent transactions which may be carried out by companies in Scotland. These sections do not apply to individuals or companies registered in England and Wales (for the position in England, see Practice Note: Can a liquidator or an administrator challenge or unwind transactions entered into by the company before it was wound up or entered into administration?). For details of antecedent transactions by individual/personal Scottish debtors, see Practice Note: Scotland: gratuitous alienations by individual debtors. For a glossary of commonly used Scottish insolvency terms, see Practice Note: Glossary of Scottish insolvency words and expressions.

Unfair preferences

What constitutes an unfair preference?

An unfair preference is a transaction entered into by a company, whether before or after 1 April 1986, which has the effect of preferring one creditor over the general body of creditors (see IA 1986, s 243(1)). The day an unfair preference is created is the day on which it became effectual.

Hardening periods

A transaction can be challenged as an unfair preference if it occurred not earlier than six months prior to the winding-up of the company (see Practice Notes: Scotland: compulsory liquidation and Scotland: process to enter creditors’ voluntary liquidation (CVL)) or the company entering administration (see IA 1986, s 243(1).

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