Abstract:
During the time of bankruptcy, protecting interests of the bankruptcy stake holders is one of the
purposes of the general bankruptcy laws. Under this study, protecting interests of legitimate
creditors from the acts of deceitful bankrupt debtors after and before the declaration of the
debtors’ bankruptcy declaration is studied. To this effect, trustees have crucial role to protect
interests of the stake holders during the time of bankruptcy which enables them to avoid fraudulent
transactions and unlawful preferences made by the bankrupt debtor. However, the extent of power
vested to the bankruptcy trustees under Ethiopian bankruptcy law is found to be with less stretched
time compared to the US bankruptcy trustees. Unlike the Ethiopian regime, the US regime of
insolvency empowers trustees with two optional look back periods to trustees enabling them to
avoid those transactions and preferences that could not be avoided with in two year look back
period. It is also argued in the study that the reason behind the strong power of trustees in US is
the institutional and legal frameworks by which trustees are governed. Finally, it is concluded
that Ethiopian insolvency regime lacks strong trustees office and a legal ways to make the trustees
powerful to claim avoidance of long time defrauded transactions and unlawful preferences
compared to the US.
