Consideration, Characterisation, Evaluation: Transactions at an Undervalue After Phillips v Brewin

Abstract:     
This paper takes the opportunity presented by the House of Lords' decision in Phillips v Brewin to examine the law governing the reversal of transactions at an undervalue entered into by a company which then becomes insolvent. The paper discusses the sequence in which issues related to ascertaining whether a transaction had been at an undervalue are to be approached, the proposition that contracts somehow "linked" with each other can be taken together as constituting a single "transaction" , and the prior question about when such contracts should be considered "linked" in the first place. Finally, the paper detects something of a tendency in the case law to use the notion of a transaction at an undervalue to brush aside inconveniences arising from the peculiarities in the way certain cases have been pleaded. Notably, it suggests that Phillips v Brewin might not have involved any transaction at an undervalue at all.

This is a somewhat updated version of the published article.

Number of Pages in PDF File: 15

Keywords: English law, corporate insolvency, bankruptcy, fraudulent preference law

JEL Classification: K19, K22, K49

working papers series