In a world where insolvency is increasingly commonplace, is it possible for a company to contract so as to place assets out of the reach of its liquidator? Many contracts provide for their termination and the recovery of property when a counterparty is in financial difficulties. When are such contractual arrangements permitted and when are they not? How does this affect real estate, trust, securitisation and intellectual property transactions?
It is a long-established principle that “there cannot be a valid contract that a man’s property shall remain his until his bankruptcy, and on the happening of that event shall go over to someone else, and be taken away from his creditors”.
