If any transactions are found that were either made after the business became insolvent, or are found to have caused the insolvency, they are known as antecedent transactions and can sometimes be reversed in order to pay creditors some or all of what they are owed.

In a similar way, a director's loan (when a director takes money out of the business and therefore owes the sum to the company) can become overdrawn if the company is not performing as profitably as expected and the money is not repaid by the director. This can have tax implications but also means that if the company becomes insolvent, the loan will be called in so that creditors can be repaid. Legal action can be taken in regard to the loan account to ensure that the money is repaid and there can be serious consequences for directors if their conduct in the lead up to the insolvency is deemed not to meet acceptable standards.

Funds recovered from either reversing antecedent transactions or recovering loan accounts will be used to pay creditors of the insolvent company.

At Forbes, our specialist insolvency solicitors can support insolvency practitioners to make successful claims of this nature, helping to release the funds needed to give creditors some return for what they are owed.