Commentary

43 Effect of assignor’s bankruptcy

CHOSES IN ACTION vol 7
| Commentary

43 Effect of assignor’s bankruptcy

| Commentary

F: EFFECT OF SUBSEQUENT INSOLVENCY OF ASSIGNOR

43 Effect of assignor’s bankruptcy

As a general rule, a trustee in bankruptcy takes subject to all equities existing at the commencement of the bankruptcy1. The trustee cannot obtain priority over an equitable mortgagee for value of the bankrupt’s choses in action merely by giving notice before the mortgagee2. The general rule is, however, subject to the statutory provisions relating to transactions at an undervalue3 and fraudulent preferences4, and to the provisions as to trade debts and to after-acquired property referred to below5.

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