Avoidance Of Transactions Under The Insolvency And Bankruptcy Code, 2016: A Comparative Analysis With UK Insolvency Law
- IJLLR Journal
- Jun 26
- 2 min read
V. Shreekumar, Research Scholar, Vels University, Chennai
ABSTRACT
The Insolvency and Bankruptcy Code, 2016 (“IBC”) was introduced in India to simplify and streamline the process of insolvency and to ensure the distribution of assets fairly among all classes of creditors. The critical part of IBC is the avoidance of antecedent transactions which allows the resolution professionals to challenge and nullify the transactions that might impact the process of insolvency. The provisions under Sections 43 to 51 of IBC address the preferential transfers, undervalued transactions, Fraudulent transactions, and credit transactions to extortionate. The reasoning for incorporating these provisions is to prevent certain advantages to specific creditors and maintain the sanctity of the resolution process.
In UK Insolvency Act, 1986 there are well-established provisions for avoidance transaction particulars provided under Sections 238, 239, and 244 which deal with the under-valued transactions, preferential transactions, and extortionate credit transactions respectively. The key distinction between these two acts is the Look-back period in which the UK allows a broader timeframe of up to 6 years in some cases. The approach of the judiciary also varies with the UK system granting the court greater discretion in finding out the suspect transactions and IBC adopts a strict time-bound procedure.
This paper will examine landmark judgments such as Jaypee Infratech Ltd., Interim Professional v. Axis Bank Ltd. in India and Re Polly Peck International plc, 1996 in the UK which highlights the practical implications of avoidance provisions. The paper explores whether the IBC mechanism is effective in achieving its objective compared to the UK regime analyzing the procedural differences, judicial decisions, and its impact on the debt resolution of companies. The paper delved into the comparative perspective and aims to provide insights into the evolution of antecedent transactions under the IBC and potential areas for reforms in the Indian Legal Structure.
