English Court Confirms Expansive Jurisdiction to Reverse Transactions to Defraud Creditors Even Outside Insolvencies

The ruling confirmed that Section 423 of the Insolvency Act 1986 has extensive international reach, and does not require a transaction at an undervalue to leave the debtor with insufficient assets.

Background -

The English High Court has held that a creditor pursuing a claim under Section 423 of the Insolvency Act 1986 (s. 423) does not need to prove that the debtor has insufficient assets to meet their claim following the disputed transaction. The ruling rejected a potential “gateway” condition that would have limited the wide scope of s. 423, and confirmed its broad international reach. S. 423 remains a powerful tool for creditors to challenge transactions at an undervalue, even outside insolvencies, and even in relation to assets outside the jurisdiction of the English court.

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