Insolvency Act 1986, section 127

Avoidance of property dispositions, etc

Part IV Winding Up of Companies Registered under the Companies Acts

[F300 (1)F300] In a winding up by the court, any disposition of the company’s property, and any transfer of shares, or alteration in the status of the company’s members, made after the commencement of the winding up is, unless the court otherwise orders, void.

[F300 (2)This section has no effect in respect of anything done by an administrator of a company while a winding-up petition is suspended under paragraph 40 of Schedule B1.F300]

[F301 (3)This section has no effect in respect of anything done during a moratorium under Part A1, or during a period mentioned in section 5(4)(a) following the end of a moratorium, where the winding-up order was made on a petition presented before the moratorium begins, unless the petition was presented under section 367 of the Financial Services and Markets Act 2000 on the ground mentioned in section 367(3)(b) of that Act.F301]

Definitions used in section 127 2

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act
administrator

1 (1) For the purposes of this Act “administrator” of a company means a person appointed under this Schedule to manage the company’s affairs, business and property.

Defined in Sch.B1 para.1(1) · see it in the full Act

Cases considering section 127 90

Skandinaviska Enskilda Banken AB v Conway and another

[2019] UKPC 36 · 29 July 2019Limits

Section 127 was used as a comparison showing that avoidance may leave recovery to the general law, including restitutionary defences. The Board distinguished that regime from section 145 because the statutory contexts differed. The Board treated cases under section 127 as materially different because the provision gives the court a power to validate dispositions and is silent on recovery. Their acceptance of change of position did not govern section 145.

A Company (Number CR-2024-BHM-000012), Re

[2024] EWCA Civ 1436 · 25 November 2024

Confirmed the significance of presentation by noting that dispositions after commencement of winding up are generally void unless the court orders otherwise. (see para [22])

Barons Finance Ltd v Barons Bridging Finance 1 Ltd & Anor

[2019] EWCA Civ 2074 · 26 November 2019

Applies section 127 to alleged assignments made after winding-up petitions had been presented. Without a validation order, those assignments were void and could not give the appellant title or a relevant interest in the loans. (see paras [31]–[35])

70 more judgments, and what each says about section 127, are in the case-law panel in the full Act.

Amendments and notes

8 notes from legislation.gov.uk

Amendments

  1. F300S. 127 renumbered as s. 127(1) and s. 127(2) added (15.9.2003) by 2002 c. 40, ss. 248(3), 279, Sch. 17 para. 15 (with s. 249(1)-(3)(6)); S.I. 2003/2093, art. 2(1), Sch. 1 (subject to arts. 3-8 (as amended by S.I. 2003/2332, art. 2))
  2. F301S. 127(3) inserted (26.6.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 12 (with ss. 2(2), 5(2))

Modifications

  1. C345Ss. 126-128 applied (with modifications) (4.1.2024) by S.I. 2021/716, Sch. 1 para. 3 (as amended by The Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023 (S.I. 2023/1399), regs. 1(2), 20)
  2. C347S. 127 restricted (25.4.1991) by Companies Act 1989 (c. 40), s. 182(4), Sch. 22 para. 7(2); S.I. 1991/878, art. 2, Sch.
  3. C348S. 127 excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 164(3), 175(4), 182(4), Sch. 22 para. 11(4); S.I. 1991/878, art. 2, Sch.
  4. C349S. 127 applied (with modifications) (S.) (6.4.2001) by S.S.I. 2001/128, reg. 4(1), Sch. 2
  5. C350S. 127 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 103, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 2
  6. C351S. 127 applied (with modifications) (6.6.2013) by The Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013 (S.I. 2013/1388), Pt. 3 reg. 1, Sch. 2 paras. 3, 5 Table (with reg. 24)