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Part VI Other Bars, 25 Bankruptcy and Winding Up

Dominic O’Sullivan

From: The Law of Rescission (3rd Edition)

Dominic O'Sullivan KC, Steven Elliott KC, Rafal Zakrzewski

From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2023. All Rights Reserved.date: 18 April 2024

Avoidance of contract — Termination/unwinding of contract

This chapter explores the general rule wherein the right to rescind survives the bankruptcy or winding up of the party against whom the right is available. Generally, recission is not barred as it will prejudice unsecured creditors of the guilty party by shrinking the pool of assets available to satisfy their claims. Moreover, a voidable share allotment cannot be rescinded after winding up commences. The chapter also studies the special bar that prevents a shareholder in a limited liability company from rescinding a statutory contract with the company. However, some statutory rights to rescind could be active if an irregular share allotment is on the line.

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