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11.2.3.1.2 Recovery from Third Party
In respect of property which has been transferred to third party, section 241(2) of the
UK Insolvency Act 1986 allows the liquidator to recover or impose an obligation on
such person, provided certain conditions are fulfilled. The section states such an
order shall not prejudice the interest of any person who acquired the property other
than from the company and was in good faith for value or prejudice any interest
deriving from that interest. 67 The section further states the order shall not require the
person who received benefit from the transaction or preference in good faith for
value to pay the liquidator or the administrator unless that person is a party to the
transaction or the payment is in respect of preference given to that person at the time
when he was the creditor of the company. 68
The New Zealand provision also gives protection to the person who acquires
property from other than the company, as long as it was for valuable consideration
and without knowledge of the circumstances under which the property is acquired
from the company. In Malaysia, the liquidator is still entitled to recover proceeds of
sale when the property has changed from the creditor who has ‗acquired property
from the company‘ to the third party under section 53B(2)(b) Bankruptcy Act
1967. 69 The right to trace the proceeds of sale will continue even if the third party
has then resold the property to a subsequent purchaser. 70 Section 53B(3) affords a
defence in this situation if it can be shown the property acquired from the preferred
creditor is for valuable consideration and in good faith.
67 Section 241(2)(a) of the UK Insolvency Act 1986.
68 Section 241(2)(b) of the UK Insolvency Act 1986.
69 Lian Keow Sdn Bhd (in liquidation) & Anor v Overseas Credit Finance (M) Sdn Bhd & Ors [1988]
2 MLJ 449 at 456.
70 Lian Keow Sdn Bhd (in liquidation) & Anor v Overseas Credit Finance (M) Sdn Bhd & Ors [1988]
2 MLJ 449 at 457.
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