Julie Hunter, Partner in the commercial department at Stephensons, looks at section 423 of the Insolvency Act 1986 following a recent judgment handed down by the High Court in the case of Riley v Aidiniantz 2025 EWHC 3222 Ch.

What are limitation periods under the Insolvency Act?

The High Court has reaffirmed the limitation period within which creditors adversely affected by a debtor’s transaction at undervalue may bring a claim under section 423 of the Insolvency Act 1986.

Section 423 (2) of the Insolvency Act 1986 provides that the court may make such order as it thinks fit for restoring a position to what it would have been had a transaction made at undervalue not been made, for the purposes of protecting the interests of persons who are ‘victims’ of such transaction.

An order under this section can only be made if the court is satisfied that the transaction was entered into for the purpose of putting assets beyond the reach of a person who is making, or may at some future time, make a claim against him, or otherwise prejudicing the interests of such a person in relation to their claim.

A transaction at undervalue is defined by section 423 (1) Insolvency Act 1986 as being where a person (‘the debtor’) enters into a transaction with another person if:

1. he makes a gift to or otherwise enters into a transaction with that other person on terms that provide for him to receive no consideration;
2. he enters into the transaction in consideration of marriage or civil partnership, or
3. he enters into the transaction for a consideration the value of which, in money or money’s worth, is significantly less than the value of the consideration provided by himself.

By section 424 Insolvency Act 1986, in cases where the debtor is not insolvent, any application for a section 423 order can only be made by a victim of the transaction i.e. a person who is, or is capable of being, prejudiced by it.

If an application for a section 423 order is made, the court has wide discretion as to the orders it may make, including the vesting to another the property transferred at undervalue, or the payment of the value of benefits received to the applicant.

An application under section 423 Insolvency Act 1986 is an application for orders and directions of the court and is a claim on a ‘speciality’, meaning a claim to enforce an obligation under statute.

By section 8 of the Limitation Act 1980, the time period within which any action or claim on a speciality shall be brought is 12 years from the date the cause of action accrued.

In contrast, actions and claims founded under a contract have a 6 year limitation period (section 5 Limitation Act 1980), as do claims for recovery of money under statute (section 9 Limitation Act 1980).

Riley v Aidiniantz 2025 EWHC 3222 Ch

In Riley v Aidiniantz [2025] EWHC 3222 Ch, the court had to determine whether the creditors claim under section 423 Insolvency Act 1986 was a speciality claim, in which case the limitation period was 12 years from the date the cause of action arose, or a claim for monies due under a statute, where a 6 year limitation period would apply.

The facts

The parties in this case are family members who have been engaged in long standing litigation relating to the ownership of shares in a company, Rollerteam Limited, which owns and manages the successful ‘Sherlock Holmes Museum’ in Baker Street, London. The value of the shares was said to be £20m. They were solely owned by Mr Aidiniantz.

Earlier litigation between the parties had resulted in claims being settled on terms which were recorded in a consent order. During that litigation, various costs orders were made against Mr Aidiniantz which required him to pay Ms. Riley’s costs. The amount of those costs had yet to be finally determined but the parties agreed they would be at least £300,625.

In 2014 and again in 2016 Mr Aidiniantz transferred his entire shareholding in Rollerteam Limited to his wife. He said the shares were genuine gifts associated with his marriage and estate planning, and their transfer was not for the purposes of avoiding enforcement of the costs orders by Ms Riley.

Ms Riley claimed that the transfer of shares by Mr Aidiniantz was a transaction at undervalue within the meaning of section 423 Insolvency Act 1986, because it was designed to put the shares beyond her reach, as a creditor of Mr Aidiniantz, so that she could not enforce the costs orders against the shares.

Ms Riley claimed that she was a victim of the transaction in which the shares were transferred.

The creditor’s arguments

In July 2024, ten years after the first share transfer and eight years after the second, Ms Riley brought an action under s. 423 Insolvency Act 1986 claiming the transfer of the shares in Rollerteam Limited were transfers at undervalue, undertaken by Mr Aidiniantz for the purpose of putting the shares out of her reach, so that she was unable to enforce the costs orders in her favour against them.

Ms Riley contended that the court had jurisdiction, under section 423 Insolvency Act 1986, to restore the position to what it would have been if the questioned transaction had not taken place, and to that end, the shares should be vested in her, for sale in order to recoup the monies owed to her by Mr Aidiniantz under the costs orders.

Mr Aidiniantz made an application for summary judgment and for the claim to be struck out, in which he advanced numerous arguments in support of his case that the claim had no reasonable prospect of success.

The debtor’s arguments

Mr Aidiniantz raised a number of arguments in support of his application, including a primary argument that Ms Riley’s claim was time barred, on the grounds the limitation period was 6 years from the date the cause of action arose.

As the final share transfer took place in 2016, Mr Aidiniantz said the time period to bring the claim expired six years later, in 2022.

He argued that the section 423 claim was in fact a claim to recover monies under statute and that it was therefore subject to a six-year limitation period.

He also argued that the section 423 claim was an action to enforce a judgment, such that, by section 24 Limitation Act 1980, the time period within which enforcement action could be brought was six years from the date when the judgment became enforceable. He contended that the costs orders had become enforceable in December 2016 and where, therefore, time barred as from 2022.

The court disagreed with Mr Aidiniantz’s arguments on both of these Limitation Act defences.

The decision

Master Bowles, sitting in the Business and Property Court, emphatically rejected Mr Aidiniantz’s argument that the section 423 claim was a claim to recover any sum recoverable by statute, stating quite clearly that the claim was on a speciality and that section 8 of the Limitation Act 1980 applied, so that the limitation period was 12 years.

The court followed the decision of the Court of Appeal in Hill v Spread Trustee Ltd [2007] 1 WLR 2404 in support of its determination in this regard, stating that a claim under s423 is not in any sense a claim to recover monies recoverable under statute. The court said it is not a money claim at all but a claim to reinstate, or make available for enforcement, assets wrongfully transferred, or paid away, by a debtor to preclude a creditor from enforcing a present, or a future, indebtedness against those assets.

The court also rejected Mr Aidiniantz’s second limitation argument, that the s423 claim was in fact an action to enforce a judgment – the costs orders made in the earlier litigation.

The court disagreed with the debtor’s analysis of s423, holding that such a claim is not an act of enforcement, and that in any event, the judgment only became enforceable when the costs were quantified, and so time could only begin to run when the costs had been finally quantified by certification, in 2021 and 2022.

Finally, the question of when Ms Riley had become a ‘victim’ of the transaction in which the share transfer took place, was considered by the court, as this determined when her cause of action arose.

The court found that she had only become adversely affected by the share transfer when funds which Mr Aidiniantz had paid into court on account of the costs orders had been exhausted, at which point Ms Riley had to look to methods of enforcement to recover the balance of the monies owed to her.

The monies paid into court had been exhausted in June 2021 and from that date Ms Riley could only recover her costs by enforcement action against Mr Aidiniantz’s assets with the result that she was, or became adversely affected by the share transfer and consequently, a victim of the transaction whereby the shares had been transferred.

Summary

This decision reaffirmed the position that the time period within which a creditor may challenge a transaction at undervalue made to put a debtor’s assets beyond the reach of his creditors, is 12 years, and the point from which that time starts to run is when the creditor becomes a ‘victim’ of the transaction in the sense that he or she becomes adversely affected by it.

As such, debtors remain vulnerable to a challenge to transactions made at undervalue long after the time the transaction took place.

About the author

Julie Hunter is a Partner in the commercial department at Stephensons. She is highly experienced in litigation and dispute resolution matters covering all aspects of commercial litigation, including invoice and asset finance, secured finance, commercial contracts disputes and general litigation.

See also

Who is liable to contribute to a company's insolvency?

Does an administration order stop limitation periods from running?

Find out more

Insolvency Act 1986 (Legislation)

Riley v Aidiniantz [2025] EWHC 3222 Ch (ICLR)

Limitation Act 1980 (Legislation)

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Publication date

10 March 2026

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.