01
Start with a transaction timeline and value map
Identify the insolvency petition date, performance, the debtor’s financial condition and creditor population. Record what each party received, how price was set and where value ultimately moved.
- Timeline
- Contract, performance, security, payments and filing.
- Value
- Market price, consideration and debtor benefit.
- Awareness
- Distress indicators objectively visible to the counterparty.
- Alternatives
- Why the transaction was rational among available options.
02
Unequal consideration is not proved by later failure alone
Article 61.2(1) reaches transactions within one year before the petition was accepted or afterwards where consideration was materially unequal. Defence uses contemporaneous valuation, market conditions, urgency, asset condition, assumed liabilities and the complete connected bargain.
03
The three-year ground requires harmful intent and counterparty knowledge
Under Article 61.2(2), the applicant establishes creditor harm, the debtor’s relevant purpose and the other party’s knowledge, subject to statutory presumptions. Distress, corporate connection and information actually available at signing must be analysed separately.
04
Preference changes the ranking or position of one creditor
Article 61.3 covers a creditor receiving more or earlier than in insolvency: early payment, security for old debt, set-off, altered priority or payment while other matured debts exist. One- and six-month periods apply to different circumstances.
05
Affiliation heightens scrutiny but does not replace evidence
Review ownership, common directors, negotiations, credit files, public data, arrears, enforcement and management information access. A counterparty should evidence ordinary diligence and the absence of objective insolvency signals.
06
Ordinary course has both qualitative and quantitative limits
Article 61.4 protection depends on transaction type, frequency, amount, terms and the statutory threshold. New security, early performance, an unusual payment method or knowledge of distress may take a transaction outside the defence.
07
Payment, set-off and in-kind settlement are tested by economic effect
Compare maturity, prior payment practice, other creditors, method and reciprocal flows. A series of smaller transfers may be assessed as one arrangement; labels do not change the estate effect.
08
Security for existing debt needs a separate rationale
A pledge, guarantee or surety granted after the principal debt arose may improve one creditor’s position. Document new money, maturity extension, forbearance, continued supply or another proportionate debtor benefit.
09
Trace both the first recipient and later transfers
Reconstruct subsequent title, payments, nominees and the ultimate acquirer. A later good-faith owner needs a distinct review of title, value, knowledge and the available recovery remedy.
10
The transaction file should exist before any dispute
Preserve contracts, valuation, marketing, competing bids, approvals, legal and tax memoranda, bank trail, primary records, correspondence, authority and KYC. Keep electronic evidence with metadata and a clear custody record.
11
Model consequences before choosing the procedural position
Article 61.6 generally returns property to the estate and may require its value where return is impossible. Model the counterparty’s revived claim, income, interest, security and effects on later transactions.
12
The ancillary dispute needs one legal and financial model
Test standing, cause of action, limitation, authority and parties. Prepare defence, interim-relief response, valuation evidence, witnesses and electronic material; assess settlement only after full restitution and enforceability modelling.
13
Good-faith counterparty defence pack
Timeline; contract suite; valuation; payments and funding; asset trail; commercial rationale; approvals; KYC; debtor financial information available at signing; alternative bids; correspondence; tax and accounting records; affiliation map; later acquirers; restitution scenario.