Anti-deprivation principle

A common law rule that an arrangement is void if:

  • The arrangement removes an asset from an insolvent entity that would otherwise be capable of realisation for the benefit of the entity's creditors.

  • The parties to the arrangement have the commercial objective of depriving the insolvent entity's creditors of the benefit of the asset in question.

  • The removal of the asset from the insolvent entity takes effect as a direct consequence of the entity's insolvency.

For more information, see Practice note, Reviewable transactions in corporate insolvency ( www.practicallaw.com/5-107-3979) .

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