Right of claim over the amount available - Avoidance of ...

Insolvency Funds from Avoided Transactions Must Enhance Creditor Asset Pool, Not Go to Resolution Applicant.

January 17, 2023

Case Laws     Insolvency and Bankruptcy     HC

Right of claim over the amount available - Avoidance of preferential transactions - The amount that is available after the transactions are avoided cannot go to the kitty of the resolution applicant - The purpose of the avoidance application as stated above is to enhance the asset pool available for the decision of creditors who are primarily financial institutions and have taken the haircut in agreeing to accept a much lesser amount than what was due and payable to them. This is public money, and, therefore, the amount that is received if and when transactions are avoided and receive the imprimatur of adjudicating authority must be distributed amongst the committee of creditors in a manner determined by the adjudicating authority. - HC

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