Insolvency Act 1986, section 341

“Relevant time” under ss. 339, 340

Part IX Bankruptcy

(1)Subject as follows, the time at which an individual enters into a transaction at an undervalue or gives a preference is a relevant time if the transaction is entered into or the preference given—

(a)in the case of a transaction at an undervalue, at a time in the period of 5 years ending with the day of the [F885making of the bankruptcy application as a result of which, or (as the case may be) the presentation of the bankruptcy petition on which, the individual is madeF885] bankrupt,

(b)in the case of a preference which is not a transaction at an undervalue and is given to a person who is an associate of the individual (otherwise than by reason only of being his employee), at a time in the period of 2 years ending with that day, and

(c)in any other case of a preference which is not a transaction at an undervalue, at a time in the period of 6 months ending with that day.

(2)Where an individual enters into a transaction at an undervalue or gives a preference at a time mentioned in paragraph (a), (b) or (c) of subsection (1) (not being, in the case of a transaction at an undervalue, a time less than 2 years before the end of the period mentioned in paragraph (a)), that time is not a relevant time for the purposes of sections 339 and 340 unless the individual—

(a)is insolvent at that time, or

(b)becomes insolvent in consequence of the transaction or preference;

but the requirements of this subsection are presumed to be satisfied, unless the contrary is shown, in relation to any transaction at an undervalue which is entered into by an individual with a person who is an associate of his (otherwise than by reason only of being his employee).

(3)For the purposes of subsection (2), an individual is insolvent if—

(a)he is unable to pay his debts as they fall due, or

(b)the value of his assets is less than the amount of his liabilities, taking into account his contingent and prospective liabilities.

(4)A transaction entered into or preference given by a person who is subsequently adjudged bankrupt on a petition under section 264(1)(d) (criminal bankruptcy) is to be treated as having been entered into or given at a relevant time for the purposes of sections 339 and 340 if it was entered into or given at any time on or after the date specified for the purposes of this subsection in the criminal bankruptcy order on which the petition was based.

(5)No order shall be made under section 339 or 340 by virtue of subsection (4) of this section where an appeal is pending (within the meaning of section 277) against the individual’s conviction of any offence by virtue of which the criminal bankruptcy order was made.

Cases considering section 341 27

Emma Sayers & Anor v John Charles Dixon & Anor

[2025] EWHC 1886 (Ch) · 30 July 2025

The court held that the relevant condition was met in relation to the Barbados property transaction. (see para [220]) As Mrs Dixon was an associate, a presumption of insolvency arose in relation to the Barbados transaction and was not rebutted. (see para [220])

Keith Algie & Anor (as Trustees in Bankruptcy of Christopher Michael Hutcheson) v Greta Diane Hutcheson

[2025] EWHC 1893 (Ch) · 23 July 2025

Applies the relevant-time provisions and insolvency presumption to an undervalue transaction with an associate. The court also found actual insolvency, so the precise date of insolvency did not require determination. (see paras [13]-[14]; [126]; [157]) Applies the presumption that the insolvency requirement is satisfied for an associate transaction within the relevant period. The presumption applied to the transfer of the Wycombe Place proceeds. (see paras [13]-[14]; [126]; [157])

Robert Armstrong & Ors v Sandra Valerie Harrow

[2025] EWHC 1790 (Ch) · 18 July 2025Defines

Applies the relevant-time and associate provisions to the deed. The transaction fell within the relevant period and the statutory presumptions applied. (see paras [67]-[69]) Applies the relevant-period provisions to the deed, which was entered into before the bankruptcy. (see paras [67]-[69]) Cites the five-year period for transactions at an undervalue and concludes that the deed was entered into within the relevant time. (see paras [67]-[68]) Cites the two-year associate preference period and applies the associate-related relevant-time regime. (see paras [67], [69]) Applies the insolvency requirement and the statutory presumption applicable to transactions at an undervalue involving an associate. (see paras [67]-[69]) Applies the inability-to-pay-debts limb; Mr Russell was insolvent when the deed was executed. (see paras [67]-[68]) Cites the alternative insolvency limb concerning becoming insolvent in consequence of the transaction or preference; the court relied on the existing insolvency finding. (see paras [67]-[68]) Cites the statutory definition of insolvency by reference to cash-flow or balance-sheet insolvency. (see para [67]) Cites the cash-flow limb of the insolvency definition. (see para [67]) Cites the balance-sheet limb of the insolvency definition. (see para [67])

7 more judgments, and what each says about section 341, are in the case-law panel in the full Act.

Amendments and notes

3 notes from legislation.gov.uk

Amendments

  1. F885Words in s. 341(1)(a) substituted (6.4.2016) by Enterprise and Regulatory Reform Act 2013 (c. 24), s. 103(3), Sch. 19 para. 33; S.I. 2016/191, art. 2 (with art. 3)

Modifications

  1. C1079S. 341 applied (with modifications) (4.4.2006) by The Cross-Border Insolvency Regulations 2006 (S.I. 2006/1030), reg. 2, {Sch. 1 Art. 23 paras. 2, 3}
  2. C1080S. 341 applied (with modifications) by S.I. 1986/1999, art. 3, Sch. 1 Pt. II (as amended (6.4.2016) by The Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016 (S.I. 2016/481), reg. 1, Sch. 2 para. 2(7)(d))