Section 423 of the Insolvency Act 1986 enables creditors to challenge transactions at an undervalue with the purpose of putting assets beyond their reach. A recurring question is how long a claimant has to bring such a claim. The High Court’s decision in Riley v Aidiniantz provides helpful clarity and re-confirms that victims have twelve years from the date loss is suffered to challenge transactions.

In Riley, the claimant issued a claim in 2024 challenging share transfers made by the defendant in 2014 and 2016. The defendant argued that the claim was issued out of time, as more than six years had passed since the transfers. The court disagreed. In doing so, the court also found that the time period for the claimant’s claim started on the date on which costs orders had been made in her favour - and not the date of the original share transfers.

Not a six‑year claim

The defendant relied on two arguments for a six‑year limitation period:

• That the claim fell within section 9 of the Limitation Act 1980 (LA80) (monies recoverable by statute), and/or
• That the claim was, in substance, an action to enforce a judgment, and so caught by section 24 LA80

Both arguments failed. The court emphasised that a section 423 claim is not a money claim but an action seeking to unwind a transaction carried out for an improper purpose. Section 9 LA80 did not therefore apply.

Even if a successful claim under section 423 ultimately facilitated enforcement of a judgment debt, the court held that would not convert the action into a statutory debt claim, so section 24 LA80 would not apply either. Likewise, although section 423 claims can resemble enforcement in some contexts, that was not the case here.

In any event, the relevant costs orders in Riley were clarified in 2021-2022, so even if the six‑year enforcement period had applied, it had not expired.

The correct period: twelve years

The court reaffirmed the established position that a section 423 claim is a “claim on a specialty”, i.e. a claim to enforce a statutory obligation. These claims attract a twelve‑year limitation period under section 8(1) LA80. Nothing in the statutory scheme changed that. Even the earliest share transfer in 2014 was therefore well within the twelve-year statutory time limit (the claim having been issued in 2024).

When does time start running?

A further point in the case concerned when the cause of action arose. A claimant (aside from insolvency officeholders) must be a “victim” who is adversely affected by the transaction.

The court accepted that Ms Riley was not adversely affected by the transaction until 2021, when costs orders were made against the debtor in earlier proceedings and a fund paid into court as security for costs was exhausted. Until then, she could rely on that fund to recover costs. This provided an additional reason why the 2024 claim was not time‑barred: the time for her claim did not start from time of the share transfers, but in 2021.

What this means in practice

The decision confirms that the limitation period for section 423 claims is twelve years and that it does not start running until actual detriment is suffered. This is good news for creditors as it provides a longer period of protection, but for debtors, it is a reminder that even historic transactions may be open to challenge.