Insolvency Act · s 208

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208.
Transactions at undervalue
(1) This section applies in the case of a company where —
(a) the company enters judicial management;
(b) the company goes into liquidation, and “office holder” means the judicial manager or liquidator, as the case may be.
(2) Where the company has at a relevant time entered into a transaction with any person at an undervalue, the office holder may apply to the Court for an order under this section.
(3) Subject to subsections (4) and (5), the Court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not entered into that transaction.
(4) For the purposes of this section and section 211, a company enters into a transaction with a person at an undervalue if the company —
(a) makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration; or

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(b) enters into a transaction with that person for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the company.
(5) The Court shall not make an order under this section in respect of a transaction at an undervalue if it is satisfied that —
(a) the company which entered into the transaction did so in good faith and for the purpose of carrying on its business; and
(b) at the time it did so, there were reasonable grounds for believing that the transaction would benefit the company.

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s 208Transactions at undervalue

(1)

This section applies in the case of a company where —

(a)

the company enters judicial management;

(b)

the company goes into liquidation, and “office holder” means the judicial manager or liquidator, as the case may be.

(2)

Where the company has at a relevant time entered into a transaction with any person at an undervalue, the office holder may apply to the Court for an order under this section.

(3)

Subject to subsections (4) and (5), the Court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not entered into that transaction.

(4)

For the purposes of this section and section 211, a company enters into a transaction with a person at an undervalue if the company —

(a)

makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration; or

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(b)

enters into a transaction with that person for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the company.

(5)

The Court shall not make an order under this section in respect of a transaction at an undervalue if it is satisfied that —

(a)

the company which entered into the transaction did so in good faith and for the purpose of carrying on its business; and

(b)

at the time it did so, there were reasonable grounds for believing that the transaction would benefit the company.