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As enacted
Contents

Part XV

418. Transaction at an undervalue

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

In this section –

(a)

“applicable transaction” means a transaction, with a recipient, to which the debtor was or is a party;

(b)

“excess” means the amount (if any) which a recipient received from the debtor under a transaction and such transaction exceeds the value that the debtor received from the recipient for the applicable transaction; and

(c)

“recipient” means a person who received value from the debtor.

(2)

A relevant office holder may, following such procedure as may be prescribed, recover an excess from a recipient where –

(a)

the debtor entered into the applicable transaction within the period of two years immediately preceding the date of commencement of the debtor’s bankruptcy, administration or liquidation;

(b)

either –

(i)

the debtor was insolvent when such debtor entered into the applicable transaction; or

(ii)

the debtor became insolvent because it entered into the applicable transaction;

Rescue, Rehabilitation and Insolvency

(c)

considering the value of the debtor’s property, the excess is a significant amount; and

(d)

either or both of the conditions in subsection (3)

is not met.

(3)

The conditions referred to in paragraph (d) of subsection (2) are that –

(a)

the applicable transaction was to be at arm’s length; and

(b)

the debtor entered into the applicable transaction in good faith.

(4)

A transaction at an undervalue is a transaction under which an excess is liable to be recovered under this section.

Read on from s 419

Part XVI

Read on from Part XVI

Part XVII

Read on from Part XVII

Schedules