Section 44 of IBC : Section 44: Orders In Case Of Preferential Transactions
IBC
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Explanation using Example
Imagine a scenario where Company XYZ goes into insolvency proceedings. Prior to the proceedings, it transferred a piece of machinery to Company ABC, which is owned by the brother of XYZ's managing director. This transfer was done at significantly below its market value and within a period that falls under the look-back period as defined by the Insolvency and Bankruptcy Code.
The resolution professional overseeing the insolvency process of Company XYZ identifies this transaction as a preferential transfer intended to move assets out of the reach of XYZ's creditors. To rectify this, the resolution professional files an application with the Adjudicating Authority under Section 44 of the Insolvency and Bankruptcy Code, 2016.
The Adjudicating Authority, upon reviewing the application, may order the following:
- The machinery to be returned and vested back in Company XYZ, so it can be part of the assets to be liquidated...
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