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ARTICLE · 01 SEPTEMBER 2017

Avoidance Of Specified Transactions Under Insolvency And Bankruptcy Code, 2016

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Whenever a person is declared as insolvent, certain transactions undertaken during the process of insolvency or even before that are avoided to overturn their effects on the finances of the corporate debtor

IndiaInsolvency/Bankruptcy/Re-Structuring
S&A Law Offices
S&A Law Offices
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Whenever a person is declared as insolvent, certain transactions undertaken during the process of insolvency or even before that are avoided to overturn their effects on the finances of the corporate debtor. The provisions are generally called as 'avoidance provisions' and are present in insolvency laws of almost all jurisdictions. They ensure that the value of assets of the company is maximized and all the creditors get their dues in an equitable manner. These provisions aim at setting aside transactions which are preferential in nature. Section 536 and 537 of Companies Act, 1956 provides for avoidance of transfers, certain attachments, executions, etc. after commencement of winding up. Similarly, Sections 328-331 of Companies Act, 2013 provide for avoidance of certain transaction undertaken before or after the commencement of winding up proceedings.

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