Commentary

238 Transactions at an undervalue and preferences

BANKRUPTCY AND INSOLVENCY (CORPORATE INSOLVENCY) vol 3(3)
| Commentary

238 Transactions at an undervalue and preferences

| Commentary

238 Transactions at an undervalue and preferences

A cardinal principle of the insolvency legislation is the pari passu distribution of the insolvent’s estate. In certain circumstances, this principle extends to transactions preceding liquidation.

Where the company has at a relevant time1 entered into a transaction at an undervalue the liquidator may apply to the court for an order restoring the position to what it would have been had the company not entered into the transaction2. A company enters into a transaction at an undervalue if it makes a gift to a person or receives no consideration in respect of that transaction

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