The powers to challenge antecedent transactions exist to:
- Protect the principle of equality in asset distribution which holds that the available assets of a company in administration or liquidation must be shared equally among its unsecured creditors.
- Help the insolvency practitioner to achieve the best return to the creditors of the insolvent company as is possible in the circumstances.
The various ways in which a transaction may be challenged are prescribed by the Insolvency Act. They are:
- Disclaimer of onerous property.
- Transactions at an undervalue.
- Extortionate credit transactions.
- Invalid floating charges.
- Transactions defrauding creditors.
- Contribution from past directors and shareholders.