Measures designed to counter attempts by debtors to make themselves judgment-proof have existed since the Byzantine era, appearing in The Institutes of Justinian (better known as The Justinian Codex), and remain an important feature of modern legal systems. The present legislation can be traced back to the Fraudulent Conveyances Act 1571 introduced in the Elizabethan era.
The Supreme Court in the present case held that section 423 of the Insolvency Act (IA) 1986 can apply to a transaction whereby a debtor agrees to procure a company which he owns to transfer a valuable asset for no consideration or at an undervalue.
As such, “transaction” within s423(1) IA 1986 is not confined to a dealing with an asset owned by the debtor.
Both the language and purpose of s423 were found to point clearly to this conclusion.
The Supreme Court also saw no good reason for giving different meanings to transactions at an undervalue in sections 238, 339 and 423 IA 1986 given that they are defined in substantially the same terms.
Read the full judgment here.
