[2025] EWHC 2294 (Ch)

Section 239: Preferences

Section 239 IA 1986 provides:

‘(1) This section applies as does section 238.

Where the company has at a relevant time (defined in the next section) given a preference to any person, the office-holder may apply to the court for an order under this section.

Subject as follows, the court shall, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not given that preference.

For the purposes of this section and section 241, a company gives a preference to a person if –

that person is one of the company’s creditors …

the company does anything or suffers anything to be done which (in either case) has the effect of putting that person into a position which, in the event of the company going into insolvent liquidation, will be better than the position he would have been in if that thing had not been done.

The court shall not make an order under this section in respect of a preference given to any person unless the company which gave the preference was influenced in deciding to give it by a desire to produce in relation to that person the effect mentioned in subsection (4)(b).

A company which has given a preference to a person connected with the company (otherwise than by reason only of being its employee) at the time the preference was given is presumed, unless the contrary is shown, to have been influenced in deciding to give it by such a desire as is mentioned in subsection (5).

The fact that something has been done in pursuance of the order of a court does not, without more, prevents the doing or suffering of that thing from constituting the giving of a preference’.

The meaning of ‘connected person’ is governed by s. 249. It includes a director of the company.

It will be noted that section 239 requires a preference in fact (s.239(4)(b)) as well as a desire to prefer (s. 239(5)), although a desire to prefer is rebuttably presumed in certain cases (s.239(6)).

In Re M C Bacon Ltd [1990] BCC 78 at 87, Millett J confirmed that, unlike intention, ‘desire’ is subjective. As he put it:

‘Intention is objective, desire is subjective. A man can choose the lesser of two evils without desiring either…. A man is not to be taken as desiring all the necessary consequences of his actions… It will still be possible to provide assistance to a company in financial difficulties provided that the company is actuated only by proper commercial considerations….’

Discretion

Even where the court concludes that the threshold requirements of ss238 and/or 239 IA 1986 are made out, its power to grant relief is discretionary. In appropriate cases the court may decline to grant any relief: In re Paramount Airways Ltd [1993] Ch 223.