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Fact pattern (A)
Latton Limited is in financial difficulties. Its creditors include HMRC, employees and various trade creditors. It has also failed to pay quarterly rent of £9 500 to the landlord of its business premises. The landlord, Jack Fisher, is a director of the company. Latton’s liabilities amount to £35 000. A debtor then makes a payment of £12 000 to the company. The board of the company authorises payment of the outstanding rent to Jack Fisher. Consider your advice on the following issues.
Latton Limited is in financial difficulties. Its creditors include HMRC, employees and various trade creditors. It has also failed to pay quarterly rent of £9 500 to the landlord of its business premises. The landlord, Jack Fisher, is a director of the company. Latton’s liabilities amount to £35 000. A debtor then makes a payment of £12 000 to the company. The board of the company authorises payment of the outstanding rent to Jack Fisher.
This transaction is potentially a preference under s.239 IA.