Section 313: Voidable preference

313. Voidable preference (1) A transaction by a debtor may be set aside by the Court on the application of the Official Receiver or a liquidator where it— (a) is a voidable preference; and (b) was made within 2 years immediately before adjudication or commencement of the winding up. (2) (a) Voidable preference is a transaction by the debtor that— (i) is made at a time when the debtor is unable to pay his due debts; and I14 – 169 [Issue 3] Insolvency Act (ii) enables another person to receive more towards satisfaction of a debt by the debtor than that person would receive, or would be likely to receive, in the bankruptcy or liquidation. (b) ”Transaction” in paragraph (a) means any of the following steps by the debtor— (i) conveying or transferring the debtor’s property; (ii) creating a charge over the debtor’s property; (iii) incurring an obligation; (iv) undergoing an execution process; (v) paying money (including money paid in accordance with a judgment or an order of a Court); or (vi) anything done or omitted to be done for the purpose of entering into the transaction or giving effect to it. (3) For the purposes of subsection (1), a transaction that is made within 6 months immediately before the debtor’s adjudication or the commencement of the winding up is presumed, unless the contrary is proved, to be made at a time when the debtor is unable to pay his due debts. (4) Where— (a) a transaction is, for commercial purposes, an integral part of a continuing business relationship such as a running account between a debtor and a creditor (including a relationship to which other persons are parties); and (b) in the course of the relationship, the level of the debtor’s net indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship, then— (i) subsection (1) applies in relation to all the transactions forming part of the relationship as if they together constituted a single transaction; and (ii) the transaction referred to in paragraph (a) may only be taken to be an insolvent transaction voidable by the Official Receiver or liquidator where the effect of applying subsection (1) in accordance with subsection paragraph (b) (i) is that the single transaction referred to in paragraph (b) (i) is taken to be an insolvent transaction voidable by the Official Receiver or liquidator. [Issue 3] I14 – 170 Revised Laws of Mauritius