Insolvency Act 1986, section 339

Transactions at an undervalue

Part IX Bankruptcy

(1)Subject as follows in this section and sections 341 and 342, where an individual is [F882madeF882] bankrupt and he has at a relevant time (defined in section 341) entered into a transaction with any person at an undervalue, the trustee of the bankrupt’s estate may apply to the court for an order under this section.

(2)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 that individual had not entered into that transaction.

(3)For the purposes of this section and sections 341 and 342, an individual enters into a transaction with a person at an undervalue if—

(a)he makes a gift to that person or he otherwise enters into a transaction with that person on terms that provide for him to receive no consideration,

(b)he enters into a transaction with that person in consideration of marriage [F883or the formation of a civil partnershipF883] , or

(c)he 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 individual.

Cases considering section 339 67

El-Husseiny and another v Invest Bank PSC

[2025] UKSC 4 · 19 February 2025Interprets

The section governs transactions at an undervalue by individuals who later become bankrupt. Its description of a qualifying transaction shares a common meaning with sections 238 and 423, and is not universally limited to dispositions of the debtor’s property (see paras [61]-[72]).

Paul Mark Simon v Lauren Belinda Simon & Anor

[2023] EWCA Civ 1048 · 15 September 2023

The court applied the analysis of section 339 in Hill v Haines to section 423, holding that an out-of-court compromise could not be the relevant transaction and that, after set-aside, no transaction remained (see paras [74]-[75]).

Invest Bank PSC v Ahmad Mohammad El-Husseini & Ors

[2023] EWCA Civ 555 · 19 May 2023Limits

The individual-bankruptcy clawback provision concerns depletion of a bankruptcy estate and differs materially in context and purpose from section 423. Its construction does not control section 423. (see paras [62]; [65]–[73]; [86]–[87]) Despite wording materially identical to section 423(1)(a), its bankruptcy context means that the construction adopted under section 339 does not bind interpretation of section 423. (see paras [68]–[73])

47 more judgments, and what each says about section 339, are in the case-law panel in the full Act.

Amendments and notes

6 notes from legislation.gov.uk

Amendments

  1. F882Word in s. 339(1) inserted (6.4.2016) by Enterprise and Regulatory Reform Act 2013 (c. 24), s. 103(3), Sch. 19 para. 31; S.I. 2016/191, art. 2 (with art. 3)
  2. F883Words in s. 339(3)(b) substituted (5.12.2005) by Civil Partnership Act 2004 (c. 33), ss. 261(1), 263, Sch. 27 para. 119; S.I. 2005/3175, art. 2(2) (subject to art. 2(3)-(5))

Modifications

  1. C1072S.339 applied (with modifications) by S.I. 1986/1999, art. 3, Sch. 1 Pt. II
  2. C1073S. 339 restricted by Drug Trafficking Offences Act 1986 (c.32, SIF 39:1), s. 15(6)(a)(7)
  3. C1074S. 339 excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 165(1)(a); S.I. 1991/878, art. 2, Sch.
  4. C1075S. 339 modified (3.2.1995) by 1994 c. 37, ss. 32(5)(b), 69(2), Sch. 2 para. 5 (with s. 66(2))