B24 INV - Antecedent Transactions PDF

4\. AVOIDANCE OF ANTECEDENT TRANSACTIONS - It is important to be aware of the relevant time periods for challenging transactions and the elements required to establish a claim. \(a) Unfair or Undue Preference (UUP) - **[Requirements]** - Section 224 of the IRDA - s...

4\. AVOIDANCE OF ANTECEDENT TRANSACTIONS - It is important to be aware of the relevant time periods for challenging transactions and the elements required to establish a claim. \(a) Unfair or Undue Preference (UUP) - **[Requirements]** - Section 224 of the IRDA - s224(1) - Company is in JM/WU + relevant time - s224(2) - Court may restore the transaction as if not entered into - s224(3) - Transaction UV is no consideration or less monies worth - - - s224(4) - Good faith defence - - - **[ Relevant time]**: Section 226 of the IRDA - s226(1)(a) - **[relevant time is 1 year for unrelated and 2 years for connected]** - s226(2) - requirement of unable to pay debts - s226(3) - TUV entered into with **[connected person]**, - s225(5), 362(5) IRDA **[Presumption of "influenced by desire to prefer\"]** - Progen Engineering \[2010\] 4 SLR 1089 - DBS Bank v Tam Chee Chong - - - Rabobank v Jurong Technologies Industrial Corp Ltd \[2011\] 4 SLR 977 - s226(4) - TUV if entered commencement of JM - s226(5) - \'relevant time\' alternative period - s226(6) - Additional relevant time periods - Extent of orders that can be granted by Court: Section 227 of the IRDA - Liquidators of Progen Engineering Pte Ltd v Progen Holdings Ltd \[2010\] 4 SLR 1089 - **[Respondant cannot simply deny the existence of desire to prefer to rebut the presumption]** - \(b) Transaction at an undervalue (TUV) - Requirements (s224 & s361 IRDA) - Section 225 of the IRDA - s225(1) - Company in JM or WU - s225(2) - Court may restore transaction - s225(3) - UP = guarantor, better position - s225(4) - Y must have desired to prefer X - What is the test? - s225(5) - unfair presumption if Y is connected to X, unless contrary is shown - s225(6) - Court order is not immunity - **[ Relevant time]**: Section 226 of the IRDA - s226(1)(a) - \ - There must be coincidence of temporal and financial element - s226(2) - requirement of unable to pay debts - s226(3) - TUV entered into with **[connected person]**, - s226(4) - TUV if entered commencement of JM - s226(5) - \'relevant time\' alternative period - s226(6) - Additional relevant time periods - Meaning of \"**[Transaction]**\" - Defence **[s224(4) IRDA]** - Void Disposition **[s130 IRDA]** - Cheo Sharon Andriesz v Official Assignee of the estate of Andriesz Paul Matthew \[2013\] 2 SLR 297 - QCD Sdn Bhd v Wah nam Plastic Industry Pte Ltd \[1997\] 1 SLR(R) 270 - Floating Charges **[s229 IRDA]** - Extent of orders that can be granted by Court: Section 227 of the IRDA - Rothstar Group Ltd v Leow Quek Shiong \[2022\] SGCA 25 - [ **Court may reverse the TUV by discharging the legal mortgage. It cannot deem TUV void or voidable.**] - \(c) Fraudulent Trading - There must be **[intent to defraud]** Section 238 of the IRDA - Responsibility for fraudulent trading - - - - - - Tang Yoke Kheng (trading as Niklex Supply Co) v Lek Benedict and others - \(d) Wrongful Trading **[s239 IRDA]** - No requirement for criminal conviction Wrongful means no reasonable prospect Section 239 of the IRDA - Responsibility for wrongful trading +-----------------------------------+-----------------------------------+ | **Elements** | **S 239(12) IRDA**: Company (Y) | | | trades wrongfully if -- | | | | | | - | | | | | | [of meeting them in | | | full]; or | | | | | | - | | | | | | o  (i) that it has [no reasonable | | | prospect of meeting in | | | full;] and | | | | | | o  (ii) **that | | | [resulted] in** | | | company becoming insolvent. | +===================================+===================================+ | **Criminal liability** | **S 239(6) IRDA**: Where company | | | has traded wrongfully, every | | | person who was party to it and | | | who -- | | | | | | - - | | | | | | is to be **[guilty of | | | offence] **and liable | | | on conviction to fine not more | | | than \$10,000 / imprisonment for | | | term not more than 3 years / | | | both. | +-----------------------------------+-----------------------------------+ | **Who** | **S 239(5) IRDA**: Following | | | persons may apply under (1) -- | +-----------------------------------+-----------------------------------+ | **may apply?** | - - - - | | | | | | o (i) judicial | | | manager/liquidator; or | | | | | | o (ii) Court. | +-----------------------------------+-----------------------------------+ | **Guidance from Court** | **S 239(10) IRDA**: Any company / | | | (with company's consent) any | | | person **[may apply to Court for | | | declaration] **as to | | | [whether particular course of | | | conduct, transaction or series of | | | transactions at time of and after | | | application would constitute | | | wrongful trading]. | +-----------------------------------+-----------------------------------+ | **Defence** | **S 239(2) IRDA**: Court may | | | relieve (in whole/part) person | | | declared responsible from | | | personal liability if -- | | | | | | - - | | | | | | personal liability. | +-----------------------------------+-----------------------------------+ | **Civil liability** | **S 239(1) IRDA**: If, in course | | | of judicial management/winding | | | up, it appears that company (Y) | | | has traded wrongfully, Court, on | | | application of any person in (5), | | | may declare that **any party to | | | trade is [personally | | | responsible] for | | | all/any of debts/other | | | liabilities of Y if he** -- | | | | | | - - | | | | | | wrongfully. | | | | | | **S 239(3) IRDA**: Court may make | | | additional orders with regards to | | | declaration in (1) -- | | | | | | - | | | | | | o (i) on any debt/obligation due | | | from company to person liable; or | | | | | | o (ii) on any charge / interest | | | in any charge on any assets of | | | company held | | | | | | - - - | | | | | | | | | | | | - | | | | | | \(c) provision for sums received | | | to be paid to such | | | persons/classes of persons. | +-----------------------------------+-----------------------------------+ - Defence of honesty s239 IRDA