Defending Preferential Payment Claims.

When a company enters administration or is liquidated, the conduct of its directors leading up to insolvency will be investigated to find out if they have acted wrongfully or unlawfully. One type of transaction that comes under scrutiny in this situation is ‘preferential payments’.

‘Preference’ occurs when a particular creditor is placed in a more beneficial position, to the detriment of the remaining creditors in that group. Examples of preferential payments include;

  1. Repaying a loan from someone connected to the company, such as a director’s relative; or
  2. Ensuring that a creditor is paid in order to encourage an ongoing professional relationship post-insolvency.

Under preferential payment claims, it’s not just the insolvent company directors who can find themselves in hot water. Creditors who receive repayments may think “thank goodness I got paid before they went bust’ but that’s not as clear cut as it seems…

Where Insolvency Practitioners or Liquidators suspect ‘preferential payment’ the creditor may be asked to repay the monies in order for the estates debts to be recovered to all creditors fairly. A Liquidator can apply for a Court Order which requires the creditor to return the money. It is possible for these cases to be commercially settled out of court, but they require an expert insolvency legal professional to defend the claim.

How can we help?

Else Solicitors have expertise in defending ‘preferential payment’ claims from the perspective of the insolvent company directors and the creditor.

We urge you to you contact Andy Rudkin on 01283 526239 or andy.rudkin@elselaw.co.uk.

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Defending Preferential Payment Claims

When a company enters administration or is liquidated, the conduct of its directors leading up to insolvency will be investigated to find out if they have acted wrongfully or unlawfully.


Learn More >

Andy has considerable experience in all areas of commercial and property litigation, including commercial contract disputes.

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Andy Rudkin

Partner - Head of Dispute Resolution

Louise has considerable experience in all areas of Commercial, Property Litigation, Dispute Resolution.

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Louise Sackey

Associate - Dispute Resolution

Amiee joined Else Solicitors in 2014 in the Dispute Resolution department, and was promoted to Associate in July 2018.

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Amiee O’Toole

Associate - Dispute Resolution

Steve joined Else after spending over 20 years in law practices in Worcestershire and the West Midlands specialising in dispute resolution particularly High Court litigation.

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Stephen Stewart

Dispute Resolution Solicitor

Daniel recently qualified as a solicitor after completing his two year training contract with Else Solicitors in the Dispute Resolution department team.

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Daniel Woodall

Dispute Resolution Solicitor

Julia has a LLB Law degree and a LLM both from BPP University, London.

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Julia Bwoma

Trainee Solicitor & County Court Advocate

How can we help?

Get in touch.

For more detailed legal advice on how we can help, please contact the dispute resolution team on 01283 526200, alternatively you can send us a message and we will get in touch at a time that suits you.