Avoidable Transactions Under The Insolvency & Bankruptcy Code, 2016

Avoidable Transactions UNDER THE INSOLVENCY & BANKRUPTCY CODE, 2016

The UNCITRAL Legislative Guide on Law of Insolvency defines avoidance proceedings as "provisions of the insolvency law that permit transactions for the transfer of assets or the undertaking of obligations prior to insolvency proceedings to be cancelled or otherwise rendered ineffective and any assets transferred, or their value, to be recovered in the collective interest of creditors."

It is very important for the Resolution Professional (RP) or the liquidator to identify such transaction and file applications to avoid it so that creditors can collect their claims. The Insolvency and Bankruptcy Code, 2016 (IBC) contains four types of avoidable transactions- preferential, undervalued, defrauding creditors and extortionate transactions. Usually, the avoidable transactions should be made within the prescribed relevant time or look back period. Look back period is the relevant time up to which an RP