Rebecca Parry and Sharif Shivji
- Published in print:
- 2018
- Published Online:
- March 2021
- ISBN:
- 9780198793403
- eISBN:
- 9780191927836
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/oso/9780198793403.003.0005
- Subject:
- Law, Company and Commercial Law
The timing of a transaction is fundamental to many of the avoidance provisions: none more so than sections 127 and 284, which operate in the period following, respectively, the presentation of a ...
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The timing of a transaction is fundamental to many of the avoidance provisions: none more so than sections 127 and 284, which operate in the period following, respectively, the presentation of a winding-up petition against a company and the presentation of a bankruptcy petition against an individual. These are times of great potential for detrimental transactions and the sections reflect this. Upon the debtor entering liquidation or bankruptcy, these sections retrospectively make any post-petition disposition automatically void regardless of whether it was a transaction that was of benefit to the debtor. Thus, beneficial transactions, such as payments to employees and sales of assets for full market value, are affected just the same as detrimental, asset-stripping, transactions. The simplicity, and harshness, of these provisions is therefore to be contrasted with most of the other avoidance provisions, which tend to be discretionary and often require some enquiry to be made regarding the debtor’s motivations.
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The timing of a transaction is fundamental to many of the avoidance provisions: none more so than sections 127 and 284, which operate in the period following, respectively, the presentation of a winding-up petition against a company and the presentation of a bankruptcy petition against an individual. These are times of great potential for detrimental transactions and the sections reflect this. Upon the debtor entering liquidation or bankruptcy, these sections retrospectively make any post-petition disposition automatically void regardless of whether it was a transaction that was of benefit to the debtor. Thus, beneficial transactions, such as payments to employees and sales of assets for full market value, are affected just the same as detrimental, asset-stripping, transactions. The simplicity, and harshness, of these provisions is therefore to be contrasted with most of the other avoidance provisions, which tend to be discretionary and often require some enquiry to be made regarding the debtor’s motivations.
