Section 682 of Insolvency Act CAP 53: Power of the Court to set aside transaction that is under value
(1) This section applies to a company that is under administration or in liquidation.
(2) In this section, "relevant time" has the meaning given by section 684.
(3) On forming the reasonable belief the the company has, at a relevant time, entered into a transaction with a person at an undervalue, the relevant office-holder may apply to the Court for an order under subsection (4).
(4) If, on the hearing of an application made under subsection (3), the Court finds that the transaction was undervalue, it shall make an order setting aside the transaction and restoring the position to that which would have existed if the company had not entered into the transaction.
(5) For the purposes of this section and section 685, a company enters into a transaction with a person at undervalue if—
(a) the company makes a gift to the person or otherwise enters into a transaction with the person on terms that provide for the company to receive no consideration; or
(b) the company enters into a transaction with the person for a consideration the value of which, in money or money's worth, is significantly less than the value, in money or money's worth, of the consideration provided by the company.
(6) The Court may not make an order under subsection (4) in respect of a transaction at an undervalue if it is satisfied—
(a) that the company that entered into the transaction did so in good faith and for the purpose of carrying on its business; and
(b) that at the time it did so there were reasonable grounds for believing that the transaction would benefit the company.
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