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Transaction Avoidance in Insolvencies$
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Rebecca Parry, James Ayliffe, Sharif Shivji, Hamish Anderson, and William Trower

Print publication date: 2018

Print ISBN-13: 9780198793403

Published to Oxford Scholarship Online: March 2021

DOI: 10.1093/oso/9780198793403.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 30 November 2021

Avoidance of General Assignments of Book Debts—Bankruptcy (Insolvency Act 1986, Section 344)

Avoidance of General Assignments of Book Debts—Bankruptcy (Insolvency Act 1986, Section 344)

(p.258) 9 Avoidance of General Assignments of Book Debts—Bankruptcy (Insolvency Act 1986, Section 344)
Transaction Avoidance in Insolvencies

Rebecca Parry

Oxford University Press

In cases where the bankrupt has engaged in business, it may be that the bankrupt has executed a general assignment of book debts, or a class of such debts, in order to raise capital. Under section 344, such an assignment is void against the trustee, in respect of debts that were unpaid at the time when the bankruptcy petition was presented, unless the assignment has been registered under the Bills of Sale Act 1878. It is only the assignment that is void and not the whole instrument containing it, so that the debt owed by the bankrupt, other covenants, and other assignments remain valid. The provision does not require that the debtor was insolvent at the time of the assignment. One reason why these assignments are void unless registered is that it can be difficult to judge whether a proper price has been paid in respect of a general assignment. Also, the presence of substantial book debts may deceive creditors into thinking that the debtor is creditworthy: registration enables the prudent creditor to discover the true position. The restrictions, however, only apply in bankruptcy and it may be that, in the modern context, this restriction puts unincorporated businesses at an unwarranted disadvantage.

Keywords:   assignments, book debts, business, exceptions, history, specified book debts

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