In force2020 Revised Edition

Contents

Insolvency, Restructuring and Dissolution Act 2018 · 2020 Revised Edition · Part 9 · Provisions Applicable in Judicial Management and Winding Up

224. Transactions at undervalue

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(1)

Subject to this section and sections 226 and 227, where a company is in judicial management or is being wound up, and the company has at the relevant time (as defined in section 226) entered into a transaction with any person at an undervalue, the judicial manager or liquidator (as the case may be) may apply to the Court for an order under this section.

(2)

The Court may, on such an application, make such order as it thinks fit for restoring the position to what it would have been if the company had not entered into that transaction.

(3)

For the purposes of this section and sections 226 and 227, a company enters into a transaction with a person at an undervalue if —

(a)

the company makes a gift to that person or otherwise enters into a transaction with that person on terms that provide for the company to receive no consideration; or

(b)

the company enters into a transaction with that person for a consideration the value of which, in money or money’s worth, is significantly less than the value, in money or money’s worth, of the consideration provided by the company.

(4)

The Court must not make an order under this section in respect of a transaction at an undervalue if —

(a)

the company entered into the transaction in good faith and for the purpose of carrying on its business; and

(b)

at the time the company entered into the transaction, there were reasonable grounds for believing that the transaction would benefit the company.