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Unfair preference: effect of winding up on antecedent and other transactions
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604. (1) Subsection (2) applies to each of the following acts, namely, any:
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(a) conveyance;
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(b) mortgage; or
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(c) delivery of goods, payment, execution or other act,
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relating to property made or done by or against a company, which is unable to pay its debts as they become due, in favour of—
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(i) any creditor of the company, or
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(ii) any person on trust for any such creditor.
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(2) An act to which this subsection applies, that is done with a view to giving the creditor referred to in subsection (1)(i), or any surety or guarantor for the debt due to such creditor, a preference over the other creditors of the company, shall be deemed an unfair preference of its creditors and be invalid accordingly if—
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(a) a winding up of the company commences within 6 months after the date of the doing of the act, and
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(b) the company is, at the time of the commencement of the winding up, unable to pay its debts (taking into account the contingent and prospective liabilities).
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(3) Any conveyance or assignment by a company of all its property to trustees for the benefit of all its creditors shall be void.
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(4) An act to which subsection (2) applies in favour of a connected person which was done within 2 years before the commencement of the winding up of the company shall, unless the contrary is shown, be deemed in the event of the company being wound up—
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(a) to have been done with a view to giving such person a preference over the other creditors, and
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(b) to be an unfair preference, and be invalid accordingly.
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(5) Subsections (2) and (4) shall not affect the rights of any person making title in good faith and for valuable consideration through or under a creditor of the company.
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