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  • Section 5: Section 5: Antecedent Transactions

    • Article 142 - Transactions at an undervalue

      (1) Where the Company has at a relevant time (defined in Article 144) entered into a transaction with any person at an undervalue, the QFC Court may, on application of the officeholder, make an order restoring the position to what it would have been if the Company had not entered into that transaction.
      (2) A Company enters into a transaction with a person at an undervalue if it makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the Company to receive no consideration, or 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.
      (3) The QFC Court shall not make an order under this Article 142 in respect of a transaction at an undervalue if it is satisfied:
      (A) that the Company which entered into the transaction did so in good faith and for the purpose of carrying on its business; and
      (B) that at the time it did so there were reasonable grounds for believing that the transaction would benefit the Company.

    • Article 143 - Preferences

      (1) Where the Company has at a relevant time (defined in Article 144) given a preference to any person, the QFC Court may, on application of an officeholder, make an order restoring the position to what it would have been if the Company had not given that preference.
      (2) For the purposes of this Article 143 a Company gives a preference to a person if:
      (A) that person is one of the Company's creditors or a surety or guarantor for any of the Company's debts or other liabilities; and
      (B) the Company does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the Company going into insolvent Liquidation, will be better than the position he would have been in if that thing had not been done.
      (3) The QFC Court shall not make an order under this Article 143 in respect of a preference given to any person unless the Company which gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in Article 143(2)(B).
      (4) A Company which has given a preference to a Connected Person (otherwise than by reason only of being its employee) at the time the preference was given is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in Article 143(3).

    • Article 144 - Relevant time under Articles 142 and 143

      The time at which a Company 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:

      (1) in the case of a transaction at an undervalue which is entered into with, or of a preference which is given to, a Connected Person (otherwise than by reason only of being his employee), at a time in the period of two years ending with the commencement of Liquidation or administration; and
      (2) in the case of any other transaction at an undervalue or preference at a time in the period of six months ending with the commencement of Liquidation or administration.

    • Article 145 - Invalid security interests

      (1) Where a Company goes into administration or insolvent Liquidation, a Security Interest in all or substantially all of the Company's property is invalid where:
      (A) the Security Interest is created in favour of a Connected Person and was created after a date two years prior to the commencement of administration or Liquidation; or
      (B) the Security Interest is created after a date one year prior to the commencement of administration or Liquidation and the Company either was at the date of the creation or became pursuant to the transaction in respect of which the Security Interest was created unable to pay its debts as they fell due.
      (2) Article 145(1) does not invalidate a Security Interest to the extent of the value transferred to the Company or liabilities of the Company released as a result of the transaction giving rise to the grant of the Security Interest.