Section 146Part 5 — Company Restructuring and Winding Up
Avoidance of dispositions made at an undervalue
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In this section and section 147 —
“ disposition ” has the meaning ascribed in Part VI of the Trusts Act ( 2021 Revision ) ;
“ intent to defraud ” means an intention to wilfully defeat an obligation owed to a creditor;
“ obligation ” means an obligation or liability (which includes a contingent liability) which existed on or prior to the date of the relevant disposition;
“ transferee ” means the person to whom a relevant disposition is made and shall include any successor in title; and
“ undervalue ” in relation to a disposition of a company ’ s property means —
the provision of no consideration for the disposition; or
a consideration for the disposition the value of which in money or monies worth is significantly less than the value of the property which is the subject of the disposition.
Every dis position of property made at an undervalue by or on behalf of a company with intent to d efraud its creditors shall be voidable at the instance of its official liquidator.
The burden of establishing an intent to defraud for the purposes of this section shall be upon the official liquidator.
No action or proceedings shall be commenced b y an official liquidator under this section more than six years after the date of the relevant disposition.
In the event that any disposition is set aside under this section, then if the Court is satisfied that the transferee has not acted in bad faith —
the transferee shall have a first and paramount charge over the property, the subject of the disposition, of an amount equal to the entire costs properly incurred by the transferee in the defence of the action or proceedings; and
the relevant di sposition shall be set aside subject to the proper fees, costs, pre - existing rights, claims and interests of the transferee (and of any predecessor transferee who has not acted in bad faith).