338 Improper preferences in or prior to winding up

(1) A creditor, member or the liquidator of a company may apply to the Court
for an order under this section if the company has given a preference to

any person at any time after the commencement of a period of 6 months
immediately preceding the relevant date.

(2) For the purposes of this section —

(a) a company gives a preference to a person if —

(i) that person is one of the company‘s creditors or is a
surety or guarantor for any of the company‘s debts or
other liabilities; and

(ii) the company does anything, or permits anything to be
done, which improves that person‘s position in the
company‘s liquidation;

(b) the relevant date is the earlier of —

(i) the date of any application to the Court for the
compulsory winding up of the company; or


(ii) the date of the passing by the company of any resolution
of members for the voluntary winding up of the
company.

(3) If on an application under subsection (1) the Court is of opinion that —

(a) the company was at the time of giving the preference, or became
as a result of giving the preference, insolvent within the meaning
of section 299; and

(b) the company was influenced in deciding to give a preference by
a desire to produce the effect mentioned in subsection (2)(a)(ii),

the Court may make such order as it thinks fit for restoring the position
to what it would have been if the company had not given the preference.

(4) Without prejudice to the generality of subsection (3), but subject to
subsection (5), an order under this section may —

(a) require any property transferred in connection with the giving of
the preference to be vested in the company;

(b) require any property to be so vested if it represents in any
person‘s hands the application of either the proceeds of sale of
property so transferred or money so transferred;

(c) release or discharge (in whole or in part) any security given by
the company;

(d) require any person to pay, in respect of benefits received by him
from the company, such sums to the liquidator as the Court may
direct;

(e) provide for any surety or guarantor whose obligations to any
person were released, reduced or discharged by the giving of the
preference to be under such new or revived obligations to that
person as the Court thinks fit;

(f) provide for security to be provided for the discharge of any
obligation imposed by or arising under the order;

(g) provide for the extent to which any person whose property is
vested by the order in the company, or on whom obligations are
imposed by the order, is to be able to claim in the liquidation for
debts or other liabilities which arose from, or were released,
reduced or discharged by, the giving of the preference.


(5) An order under this section may affect the property of or impose
obligations on any person, whether or not he is the person to whom the
preference was given, but shall not —

(a) prejudice any interest in property acquired from a person other
than the company in good faith, for value and without notice of
the existence of circumstances enabling an order under this
section to be applied for;

(b) prejudice an interest deriving from such an interest; or

(c) require a person to pay a sum to the liquidator in respect of a
benefit received by that person at a time when he was not a
creditor of the company, and received by him in good faith, for
value and without notice of the existence of circumstances
enabling an order under this section to be applied for.

(6) In the application of this section to any case where the person given a
preference is connected with the company —

(a) the reference in subsection (1) to 6 months is to be read as a
reference to 2 years; and

(b) the company is presumed, unless the contrary is shown, to have
been influenced in deciding to give the preference by such
desire as is mentioned in subsection (3)(b).

(7) For the purposes of subsection (6) a person is „connected“ with the
company at any time if the company knew or ought to have known at that
time that —

(a) that person had any significant direct or indirect proprietary,
financial or other interest in or connection with the company
(other than as a creditor, surety or guarantee), or

(b) another person had any such interest in or connection with both
that person and the company.

(8) The fact that something is done or permitted pursuant to a Court order
does not, without more, prevent it from being a preference.

(9) This section is without prejudice to any other remedy.