fraudulent preference

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Paying money to a creditor of a company, or otherwise improving a creditor's position, at a time when the company is unable to pay its debts. If this occurs because of an act of the company within six months of winding-up (or two years if the preference is given to a person connected with the company), an application to the court may be made to cancel the transaction. The court may make any order that it thinks fit, but no order may prejudice the rights of a third party who has acquired property for value without notice of the preference.

Subjects: Financial Institutions and Services.

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