Consideration, Characterisation, Evaluation: Transactions at an Undervalue after 'Phillips v Brewin Dolphin'
South Square Chambers
Look Chan Ho
Freshfields Bruckhaus Deringer LLP
Journal of Corporate Law Studies, Vol. 2001, No. 2, December 2001
This paper takes the opportunity, presented by the House of Lords' decision in Phillips v Brewin Dolphin, 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 Dolphin might not have involved any transaction at an undervalue at basall.
Keywords: bankruptcy; undervalue transactions
JEL Classification: G33, K22, K42
Date posted: April 15, 2002