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What are Undervalue Transactions?

Transactions at Undervalue

Either an administrator or a liquidator can apply to the court to set aside any transaction at an undervalue. The court may set aside a transaction as a transaction at an undervalue if:

  • The company made a gift or otherwise entered into a transaction on terms that the company received no consideration, or it entered into a transaction 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 company; and
  • the transaction was entered into at a relevant time, that is, during the two years before the onset of insolvency; and
  • the company was unable to pay its debts at the time of the transaction or became unable to pay its debts as a result.
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