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Summary Law of insolvency: Impeachable dispositions
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comprehensive notes summarised from Hockley's Insolvency Law 9th Edition textbook.
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Topic 8: Impeachable dispositionsIntroduction
- Trustee has power to recover certain property alienated by insolvent before sequestration
To impeach something means
- Call its validity into question
Insolvency Act sets out sections which are
- Intended to protect creditors where X (insolvent) entered into transactions before he became insolvent,
which have the effect, upon insolvency and sequestration, of being prejudicial to the general body of
creditors
- These transactions are called disposition
o It involves a disposing of an estate asset (includes money)
What does it mean to dispose of?
- To transfer
- Give away
- Donate etc
When does it occur?
- Enquiry for impeachable dispositions are made at time when trustee looking for property that has been
disposed of
A trustee may
- Impeach a disposition (question validity of disposition)
He can do this by
- Making an application to court to have disposition set aside
If court of opinion that disposition should be set aside then
- Disposition is consequently retrospectively invalid
- The asset, or its value, will be retrieved from party to whom the insolvent disposed the asset to
- Asset will then be available to be distributed amongst creditors
Four main types of impeachable dispositions: Dispositions which may be set aside
- Dispositions without value
o Such as donations
- Voidable preferences
o Dispositions having the effect of preferring one creditor above another
- Undue preferences
o Dispositions that is intended to prefer one creditor above another
- Collusive dealings
o Made in collision with another and having the effect of prejudicing creditors or preferiing one
above another
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