Once a company has entered into a formal insolvency process, all its assets must be realised and distributed in accordance with the Companies Acts. An attempt to prefer a particular creditor up to two years prior to an insolvent liquidation can be declared void by the courts on the application of the liquidator of the insolvent company. To succeed on such an application, however, the liquidator must prove that the dominant intention of the insolvent company at the time it entered into the transaction was to prefer the creditor in question.

The Bankruptcy Court for the Southern District of New York held recently that § 550 of the Bankruptcy Code does not limit the potential recovery on fraudulent transfer claims to the amount of unpaid creditor claims against a debtor’s estate. According to the Court, the language in § 550(a) that states that a plaintiff in an avoidance action can recover the property transferred or the value of the property “for the benefit of the estate” provides a “floor” rather than a “ceiling” on recovery.