Insolvency Act 1986, section 239

Preferences (England and Wales)

Part VI Miscellaneous Provisions Applying to Companies Which are Insolvent or in Liquidation

(1)This section applies as does section 238.

(2)Where the company has at a relevant time (defined in the next section) given a preference to any person, the office-holder may apply to the court for an order under this section.

(3)Subject as follows, 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 given that preference.

(4)For the purposes of this section and section 241, a company gives a preference to a person if—

(a)that person is one of the company’s creditors or a surety or guarantor for any of the company’s debts or other liabilities, and

(b)the company does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the company going into insolvent liquidation, will be better than the position he would have been in if that thing had not been done.

(5)The court shall not make an order under this section in respect of a preference given to any person unless the company which gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (4)(b).

(6)A company which has given a preference to a person connected with the company (otherwise than by reason only of being its employee) at the time the preference was given is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in subsection (5).

(7)The fact that something has been done in pursuance of the order of a court does not, without more, prevent the doing or suffering of that thing from constituting the giving of a preference.

Definitions used in section 239 1

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

Cases considering section 239 100

Stanford International Bank Ltd v HSBC Bank PLC

[2022] UKSC 34 · 21 December 2022Interprets

The provision permits reversal of unlawful preferences which improve one creditor's position without reducing the company's net assets. Its policy concerns redistribution rather than compensation for company loss (see paras [48]-[50]; [73]-[75]).

BTI 2014 LLC v Sequana SA and others

[2022] UKSC 25 · 5 October 2022Interprets

The statutory preference remedy has specified insolvency, timing and intention requirements and is usually pursued against the recipient. Those features differ from a fiduciary claim against directors, so the provision is not incompatible with the creditor-interest rule (see paras [100]-[109]).

Skandinaviska Enskilda Banken AB v Conway and another

[2019] UKPC 36 · 29 July 2019Interprets

Section 239 was contrasted with section 145 because it expressly empowers the court to restore the position after a preference. The contrast supported the conclusion that section 145 leaves recovery to the general law.

80 more judgments, and what each says about section 239, are in the case-law panel in the full Act.

Amendments and notes

10 notes from legislation.gov.uk

Modifications

  1. C794Ss. 238-241 applied (with modifications) (31.1.2019) by Technical and Further Education Act 2017 (c. 19), s. 47(2), Sch. 3; S.I. 2018/1161, reg. 3(c)
  2. C795Ss. 238-241 applied (with modifications) (31.1.2019) by Technical and Further Education Act 2017 (c. 19), s. 47(2), Sch. 4; S.I. 2018/1161, reg. 3(d)
  3. C797Ss. 238-241 applied (with modifications) (15.3.2024) by The Water Industry (Special Administration) Regulations 2024 (S.I. 2024/205), regs. 2(2), 5(1) (with reg. 64)
  4. C798S. 239 excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 165(1)(b); S.I. 1991/878, art. 2, Sch. .
  5. C799S. 239 restricted (25.4.1991) by Companies Act 1989 (c. 40), s. 182(4), Sch. 22 para. 8(1)(b); S.I. 1991/878, art. 2, Sch. .
  6. C800S. 239 applied (with modifications) (4.4.2006) by The Cross-Border Insolvency Regulations 2006 (S.I. 2006/1030), reg. 2, Sch. 1 Art. 23 paras. 1-3 (subject to Sch. 1 Art. 23 paras. 6-9)
  7. C801S. 239 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
  8. C802S. 239 applied (with modifications) (17.2.2009 for certain purposes, otherwise 21.2.2009) by Banking Act 2009 (c. 1), ss. 145, 263(1)(2) (with s. 247); S.I. 2009/296, arts. 2, 3, Sch. para. 3
  9. C803S. 239 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)
  10. C804S. 239 applied (with modifications) (8.7.2021) by The Payment and Electronic Money Institution Insolvency Regulations 2021 (S.I. 2021/716), regs. 2, 37 (with reg. 5) (as amended (4.1.2024) by S.I. 2023/1399, regs. 1(2), 4, 11)