Transfers at Undervalue: New Wine in Old Wineskins?

Abstract

Section 96 of the Bankruptcy and Insolvency Act sets out provisions that permit a trustee in bankruptcy to challenge pre-bankruptcy transfers at undervalue entered into by a debtor. These provisions were amendments to the BIA that came into force in 2009. There can be no doubt that the transfer at undervalue provisions are vastly superior to the provisions that they replaced. The tools that are now at hand are much better suited to realizing the underlying objectives of bankruptcy and insolvency law. However, the new provisions recycle several features of prior law. Jurisdictions that have reformed their outdated fraudulent conveyance law will find that they have not been able to fully escape the hold of the past – many features of the old law are now preserved in the transfer at undervalue provisions of the BIA.

Keywords: Bankruptcy, Insolvency, Transfers at Undervalue, Reviewable Transactions