Law · Corporate Law and Insolvency
Immediately before XY Ltd was placed in insolvent liquidation, Alex, the company's sole director, arranged for the company to make an early repayment of an unsecured loan of £15,000 which he had provided to the company. Which of the following statements is correct regarding this transaction?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The repayment may have created an unfair preference and Alex may be required to return the £15,000 to XY Ltd.✓
- 2Alex will automatically face criminal fines for this action.
- 3The repayment of the loan is fully valid as long as Alex was acting in good faith.
- 4XY Ltd and Alex are strictly guilty of criminal fraud.
Correct answer
The repayment may have created an unfair preference and Alex may be required to return the £15,000 to XY Ltd.
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