By S&S Co. Advocates & Solicitors · Published 30 June 2026 · Informational content, not legal advice
About this article: A general explainer prepared by S&S Co. Advocates & Solicitors on a recurring type of dispute. It does not report a specific judgment or order, names no parties and gives no case citation, so it should not be cited as authority. Law and practice change; please verify against the current statute and primary sources before relying on it.
The Insolvency and Bankruptcy Code, 2016 allows transactions made before the start of the insolvency process to be challenged in specified circumstances. These include preferential transactions (Section 43), undervalued transactions (Section 45), extortionate credit transactions (Section 50) and transactions intended to defraud creditors (Section 66). Under Regulation 35A of the CIRP Regulations, the resolution professional must form an opinion on whether the corporate debtor has been subject to such transactions and, if so, make an application to the adjudicating authority.
Transfers to companies controlled by the promoter group shortly before default carry a greater risk that value was moved out of the corporate debtor. Examples are intercompany transfers, management fee arrangements and sales of inventory. The Code gives a longer look-back period for related parties, which for preferential transactions is two years instead of one.
Not every related-party transaction is avoidable, and each must be assessed on its own facts, including whether it was in the ordinary course of business and what consideration was given. A tribunal may nonetheless expect the resolution professional's report to identify related-party transactions as a distinct category and to explain how each was treated.