Undervalued transactions defrauding creditors require restoration of assets while protecting good-faith third-party interests.

Where a debtor has entered into an undervalued transaction deliberately to place assets beyond the reach of claimants or adversely affect their interests, the Adjudicating Authority must restore the pre-transaction position and protect victims of the transaction. The provision also protects good-faith third-party transferees and recipients who acquired property or benefits for value and without notice, unless they were parties to the transaction.

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