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The concept of avoidance of preferential transactions under Section 43 of the Insolvency & Bankruptcy Code, 2016 (Code), is based on the principle that insolvency is a collective scheme process and that the assets of a corporate debtor (CD) are distributed equitably in a liquidation scenario. During the twilight period of insolvency, paying off one creditor selectively can be disadvantageous to the interests of other stakeholders/creditors as transferring certain assets/monies diminishes the CDs value. To reverse/avoid such preferential transactions, Section 43(1) of the Code empowers the resolution professional (RP) or the liquidator to approach the jurisdictional National Company Law Tribunal (NCLT)….
Read the full article at: https://corporate.cyrilamarchandblogs.com/2024/05/the-ordinary-course-of-business-exception-in-preferential-transactions-deciphering-the-interpretation-methodology/