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.

Get in touch with our experts today by calling 01283 526239.

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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 >

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

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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.

``Despite my changes in employers, I have worked with Else Solicitors for over 15 years. Their Insolvency and litigation knowledge, expertise and professionalism has been excellent on every occasion. Their advice is always specific to the case, and where necessary they will adopt a commercial approach in dealing with matters, which at times are complex in nature. This has enabled matters to be dealt with swiftly and more importantly in the interest of the creditor’s.``

Curtis Roberts Director Durkan Cahill Business Recovery & Insolvency

``We worked with ELSE 5 years ago on a strategy to recover a six figure sum of outstanding money from a UK Customer. With the support from ELSE we successfully recovered the money in full & quicker than expected. More recently we got involved in the takeover of a company that went into administration. We needed a wide range of legal & commercial help on the purchase from the administrators & subsequently on many other issues, including new company setup, employment law, TUPE, redundancy, lease contracts for premises & much more. We have been very satisfied with the professional support we have received, trust the advice ELSE give us & continue to use their wide range of services.``

Gavin Morrison Managing Director, OTR Wheel Engineering Europe Ltd

“Having instructed the team at Else Law in relation to various matters I can highly recommend the use of their services; in my experience the team at Else Law are always on hand to provide useful advice giving me the benefit of their extensive knowledge and offering vital support as necessary.”

Helen Bingley Property Administration Supervisor - John Pye

``Else are a firm renowned for their litigation expertise. Smith Cooper will often refer insolvency matters, antecedent transactions to the high skilled team who apply commercial awareness and agile thinking to complex cases.Andy Rudkin leads his growing team by example, demonstrating first class client care and technically accurate advice on every case. His lateral thinking means that he can navigate tricky matters accordingly.``

Dean Nelson Partner - Business Recovery & Insolvency - Smith Cooper