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Preference Transaction Avoidance in Ghana: Has the Liquidator's burden changed?
Author(s) -
Adarkwah Samuel
Publication year - 2019
Publication title -
international insolvency review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.125
H-Index - 7
eISSN - 1099-1107
pISSN - 1180-0518
DOI - 10.1002/iir.1326
Subject(s) - creditor , insolvency , database transaction , preference , business , position (finance) , asset (computer security) , corporate law , payment , law , economics , law and economics , finance , political science , computer security , debt , corporate governance , computer science , microeconomics , programming language
Financially distressed companies sometimes conceive plans to pay off certain creditors before petitioning the Court for winding up. This last‐minute payment referred to as a preference transaction puts the preferred creditor in a better position than the rest of the company's creditors because the distressed company may not have enough assets to satisfy everyone. Insolvency law frowns on such last‐minute transactions and provides the Liquidator with the power to avoid these transactions, to restore the asset to the company and distribute it to all the creditors. Preference avoidance forms an integral part of the corporate insolvency law in Ghana. These principles founded upon the common law of England are now provided for under the Bodies Corporate (Official) Liquidation Act 1963 (Act 180) of Ghana. This essay discusses preference avoidance under Ghanaian law. It also examines a recent judicial application of the law and finally suggest avenues for reform.