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Undervalue transaction

An undervalue transaction is a transaction entered into by a company[1] who subsequently goes into bankruptcy which the court orders be set aside, usually upon the application of a liquidator for the benefit of the debtor's creditors.[2] This can occur where the transaction was seriously disadvantageous to the company and the company was insolvent or in immediate risk of becoming insolvent.

  1. ^ Some legal systems also apply undervalue transactions to insolvent individuals
  2. ^ See for example, section 238 of the Insolvency Act 1986 in the United Kingdom, and section 558FB of the Corporations Act 2001 in Australia

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