Voidable preference: Difference between revisions

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 {{a|glossary|
 [[File:Void.jpg|450px|thumb|center|[https://www.artlimited.net/35486/art/image-far-from-void/en/642461 ''Far from Void''], Michael Dunaj]]
-}}What happens if you create a [[security interest]] over existing [[indebtedness]], and then go bust within a period specified by statute (usually 6 months of thereabouts). The law will set aside such a [[security interest]], supposing that in creating it a debtor was acting with base motives: preferring one of his buddies, to whom he owed money, over his legion other creditors, when the writing on the wall or his solvency made itself suddenly all too painfully clear.
+}}{{d|Voidable preference|/ˈvɔɪdəbl/ /ˈprɛfərəns/|n|}}<br>
-Most jurisdictions have some kind of “anti-deprivation” principle in their insolvency regime which stops a struggling company from preferring some of its creditors over other ones.
+What happens if you create a [[security interest]] over existing [[indebtedness]], or generally prefer one creditor to others and then go ''[[tetas arriba]]'' within a short period — usually specified by statute; 6 months of thereabouts). The [[insolvency]] laws of the land will set aside such a [[preference]], at the petition of your administrator, if it supposes that, in creating it a debtor was acting with base motives: preferring one of his buddies, to whom he owed money, over his legion other creditors, when the writing on the wall or his solvency made itself suddenly all too painfully clear.
+Most sophisticated jurisdictions have some kind of “anti-deprivation” principle in their insolvency regime which stops a struggling company from preferring some of its creditors over other ones. There is usually an excpetion for desperate rearguard actions taken in good faith with a genuine aspiration to stave off calamity, notwithstanding that they might have inadvertently caused it.
 In the UK, it is section 239 of the [[Insolvency Act 1986]], and it goes something like this:
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 :''(b) the company enters into a transaction with that person 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.''<br>}}
-This is wide and loose, and gives an insolvency administrator power to stop companies preferring, you know, the director’s brother in law’s firm which supplies the copier paper. It gives those extending credit to struggling companies pause for thought, at any rate. But it goes wider than just setting aside security interests. If you have five trade creditors and you pay off one of them a week before you go insolvent, expect the administrator to have a good hard look at that payment.
+This is wide and loose, and gives an insolvency administrator power to stop companies preferring, you know, the director’s brother in law’s firm which supplied the copier paper. It shoujld give those extending credit to struggling companies pause for thought, at any rate. But it goes wider than just setting aside security interests. If you have five trade creditors and you pay off one of them a week before you go insolvent, expect the administrator to have a good hard look at that payment.
-===[[Limited recourse]]===
+===[[Limited recourse]] and voidable preferences===
-Now elsewhere in the wonderful world of structured finance is the [[Secured, limited recourse obligation|secured limited recourse]] [[espievie]].
+Now elsewhere, in the wonderful world of structured finance, is a sort of anti-preference gambit: the [[Secured, limited recourse obligation|secured limited recourse]] [[espievie]].
 {{quote|{{Repackaging limited recourse capsule}}}}
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 But latterly, [[limited recourse]] has slipped its moorings and drifted into the shipping lanes through which ordinary, unsecured asset management vehicles lumber. [[Hedge fund]]s. [[UCITS]]. [[SICAV]]s. An [[investment fund]] [[espievie]] doesn’t usually grant security over its assets at all, and it has a much more dispersed, antagonistic bunch of creditors and, usually, equity holders too.
-There’s a ''weak'' justification [[limited recourse]] — to preserve the livelihoods of espievie directors who might otherwise be barred from “running” companies due to their reckless trading — but this is a weak reason, and removing it might incentivise the director to, you know, supervise the company’s [[agent]]s to make sure they are conducting themselves with probity. Which is, after all, what directors are paid to do.
+There’s a ''weak'' justification [[limited recourse]] — to preserve the livelihoods of [[espievie]] directors who might otherwise be barred from “running” companies due to their reckless trading — but this is a weak reason, and removing it might incentivise the director to, you know, supervise the company’s [[agent]]s to make sure they are conducting themselves with probity. Which is, after all, what directors are paid to do.
 And there’s a rather pressing reason for a [[creditor]] to ''resist'' a limitation on its recourse: creditors, who might otherwise be at each others’ throats, are protected from each other when the company go into receivership. Insolvency rules ensure they’re treated fairly. Such as the rules against [[voidable preference]]s a company grants to its favourite creditors just before it goes ''[[seins en l’air]]''.