A recent director disqualification case involving the transfer of almost £3 million of company assets to connected businesses is a useful reminder of the scrutiny that transactions can receive when a company is approaching insolvency.
The case concerned Scottish businessman Garry Pettigrew and was decided by the Court of Session in Scotland. This article does not treat the Scottish decision as authority on antecedent transaction claims in England and Wales. Instead, it uses the circumstances as a practical example before considering the separate remedies available under insolvency law in England and Wales.
For directors, the important point is that transferring assets before insolvency does not automatically amount to misconduct. The circumstances, value received, financial position of the company, reasons for the transaction and interests of creditors all matter. However, transactions involving connected businesses are likely to receive particular attention if the company subsequently enters a formal insolvency process.
What happened in the Garry Pettigrew director disqualification case?
According to the Insolvency Service’s announcement of the director disqualification, Garry Pettigrew was a director of Healthcare Environmental Services Limited, a waste disposal company which serviced the NHS.
- The company lost significant NHS contracts during October and December 2018. Between those months, Pettigrew caused assets worth £2,979,383 to be transferred from the company to HEG Sustainable Solutions Limited and Starryshaw Consultants Ltd. Pettigrew and his wife were the only directors of those connected companies at the relevant time.
- The Insolvency Service said the transfers took place without the consent of the company’s bank, which held a charge over all its assets, and despite advice from accountants and solicitors that consent was required. An attempted sale of the business subsequently collapsed, trading ceased and the company entered liquidation in April 2019 with debts exceeding £15 million.
On 20 August 2026, the Court of Session disqualified Pettigrew from acting as a company director for nine years. The court found that his conduct amounted to a serious breach of his duties as a director. His co-director, Alison Pettigrew, had previously given a three-and-a-half-year disqualification undertaking in 2021 for allowing the transfers to take place.
Importantly, the Insolvency Service announcement does not state that a liquidator successfully recovered the £2.98 million through a transaction at an undervalue, preference or other antecedent transaction claim. The reported outcome was director disqualification. The distinction matters because recovery proceedings and director disqualification are separate legal processes.
What are antecedent transactions in England and Wales?
An antecedent transaction is broadly a transaction entered into before formal insolvency which an administrator or liquidator may subsequently investigate and, where the statutory requirements are satisfied, seek to challenge.
Our guide to defending liquidator claims and antecedent transactions explains the principal categories in more detail. They include transactions at an undervalue under section 238 of the Insolvency Act 1986, preferences under section 239 and transactions defrauding creditors under section 423.
The purpose of the legislation is not to reverse every commercial decision made before a company fails. Companies experiencing financial difficulty may continue to sell assets, restructure their affairs and make payments. The question is whether a particular transaction satisfies the legal requirements for challenge.
This is why the underlying evidence is important. Valuations, contractual documents, board minutes, professional advice and the commercial reasons for a transaction may all become relevant if an office-holder later investigates what occurred.
When can transactions at an undervalue or preferences be challenged?
A transaction at an undervalue can arise where a company gives an asset away or receives significantly less value than it provides. Where the statutory conditions are satisfied and the company subsequently enters administration or liquidation, an administrator or liquidator may seek an order restoring the position for the benefit of creditors. Government guidance confirms that the company’s solvency at the relevant time, the value exchanged and any connection between the company and recipient can all be important.
A preference claim concerns a different situation. Broadly, it may arise where a creditor, surety or guarantor is put into a better position than they would otherwise have occupied in an insolvent liquidation and the necessary statutory test, including the question of a desire to prefer, is satisfied.
The Insolvency Service’s technical guidance explains that the ordinary relevant period for a company preference is six months before the onset of insolvency, extending to two years where the beneficiary is connected with the company. In connected-party cases there is also a rebuttable presumption concerning the desire to prefer.
There is a further category of transactions under section 423 of the Insolvency Act 1986. Transactions defrauding creditors can potentially be challenged where assets have been transferred at an undervalue with the purpose of putting assets beyond the reach of creditors or otherwise prejudicing their interests. The legal requirements are distinct and intention is particularly important.
These claims are fact-sensitive. A transfer to a connected company is not automatically unlawful simply because the recipient is connected. Equally, putting documentation in place does not by itself protect a transaction if its commercial substance cannot be justified.
Can transferring assets before insolvency lead to director disqualification?
Potentially, yes. A transaction may be examined both from the perspective of recovering value for the insolvent company and from the separate perspective of a director’s conduct.
The Insolvency Service identifies conduct which seeks to deprive creditors of assets as an example of conduct which may contribute to a finding of unfitness. Director disqualification proceedings are civil proceedings, and a disqualification order or undertaking can prevent an individual from being involved in the promotion, formation or management of a company without permission for up to 15 years.
This is why directors facing an investigation should distinguish between the different risks. A liquidator may investigate whether money or property should be restored to the company. Separately, the Insolvency Service may consider whether the director’s conduct justifies disqualification.
Our director disqualification solicitors guide explains the disqualification process and the types of misconduct which may be investigated. Where an office-holder is also alleging that company assets were improperly transferred, directors may need to consider their position on both fronts rather than treating the matters as a single claim.
What should directors do before moving company assets when insolvency is a risk?
Directors do not need to assume that every difficult commercial decision will later result in personal liability. However, decisions taken when a company’s financial position is deteriorating should be approached carefully.
- Before transferring a significant asset, particularly to another company connected with the directors or shareholders, the board should be able to explain the commercial purpose of the transaction and the value being received. Independent valuations may be appropriate where the market value of an asset could later be disputed.
- Directors should also ensure that board decisions, financial information and professional advice are properly documented. If a lender has security over company assets, the terms of that security and any requirement for consent should be checked before the transaction takes place.
- Taking advice can be particularly important where insolvency is already a realistic possibility. Early decisions may later be examined by a liquidator, administrator or the Insolvency Service, sometimes years after the event. Clear records of what directors knew, what advice they obtained and why they considered a transaction to be in the company’s interests can therefore be important.
Where a director has already received questions or a claim from an insolvency practitioner, our team regularly advises on liquidator and administrator claims against directors. The existence of an investigation does not establish liability. Each alleged antecedent transaction must be considered against its particular statutory requirements and evidence.
