Monday 6 April 2026
Your weekly SQE Prep Quiz has arrived
Dear Subscriber,
Hope you had a great Easter weekend. Please see below for the question, the answer to the previous question and associated resources. This is the web version of this newsletter.
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This Week’s Question: A man is tried in the Crown Court for robbery. During the trial, the prosecution seeks to rely on a previous conviction of the defendant for a similar offence committed five years earlier. The defendant has chosen to give evidence and, during cross-examination, states that he is “not the sort of person who would ever use violence.” The prosecution applies to adduce evidence of the previous conviction as bad character evidence. Under the Criminal Justice Act 2003, which of the following best explains whether the evidence of the previous conviction is admissible?
A. The evidence is automatically admissible because all previous convictions are relevant to credibility once the defendant gives evidence.
B. The evidence is admissible because the defendant has made an assertion about his own good character, allowing the prosecution to rebut it.
C. The evidence is inadmissible unless the defendant consents, because prior convictions are excluded to ensure a fair trial.
D. The evidence is admissible only if the prosecution can show that the previous conviction directly proves the defendant committed the current offence.
E. The evidence is inadmissible because it would unfairly prejudice the jury, regardless of what the defendant said in evidence.
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Last Week’s Question: A private company had been trading profitably for several years but then suffered a sharp cashflow collapse after losing a major customer. The company owed substantial sums to trade creditors and to its bank, which held a floating charge over all present and future assets. The directors knew the company was under severe pressure, but they believed a rescue refinancing might still be possible. Five days before a winding-up petition was presented, the company repaid in full a loan made six months earlier by another company owned by one of the directors’ spouse. No similar payments were made to ordinary trade creditors, who remained unpaid. Two weeks later, the company entered insolvent liquidation. Which statement best explains the liquidator’s strongest argument in relation to that repayment?
A. The repayment is automatically void because any payment made shortly before insolvency is invalid once a floating charge exists over the company’s assets.
B. The repayment is most likely challengeable as a preference, because it put a connected creditor into a better position and the connection supports the inference of the required desire to prefer.
C. The repayment is challengeable only as a transaction at an undervalue, because repaying an existing debt always counts as disposing of value for no consideration.
D. The repayment cannot be challenged because paying a genuine debt is always a proper exercise of directors’ powers, even where connected persons are involved.
E. The repayment is valid unless the liquidator can prove the directors acted fraudulently and intended to cheat the company’s creditors.
✅ Correct Answer: B The repayment is most likely challengeable as a preference, because it put a connected creditor into a better position and the connection supports the inference of the required desire to prefer. Feedback: This is a classic preference problem. A company gives a preference where it does something that puts a creditor, surety, or guarantor into a better position in the event of insolvent liquidation than that person would otherwise have been in. Where the recipient is a connected person, the statutory connection is highly significant because it makes the liquidator’s task easier on the question of the company’s desire to prefer. On these facts, the company repaid in full a debt owed to a business owned by the spouse of a director, shortly before insolvent liquidation, while leaving ordinary creditors unpaid. That is exactly the kind of fact pattern from which a liquidator would argue that the company was influenced by the requisite desire to prefer a connected creditor.
Why the other answers are wrong
A is wrong because the existence of a floating charge does not automatically invalidate payments made before insolvency. The issue is not automatic invalidity; it is whether the payment falls within an avoidance provision such as preference.
C is wrong because repayment of a genuine existing debt is not normally a transaction at an undervalue. The company is discharging a real liability, so this is not the best characterisation of the transaction.
D is wrong because even payment of a genuine debt may still amount to a preference if the statutory elements are met. The fact that the debt was real does not end the analysis.
E is wrong because fraud is not required for a preference claim. Fraudulent trading is a different and more serious allegation. A preference challenge turns on the statutory test, not on proving dishonesty.
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Dr Ioannis (Yannis) Glinavos
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