Purpose: This research aims to investigate the status of third party rights in the termination and invalidation of bankrupt merchant transactions in Iranian statutory law and judicial practice.Method(s): This research was conducted using library studies and a descriptive-analytical approach. The necessary information was obtained and analyzed by referring to jurisprudential evidence, laws, statutory law, and Iranian judicial practice.Findings: The research findings indicate that on the one hand, creditors have the right to benefit from the assets of the bankrupt businessman in order to collect their claims, but on the other hand, third parties who have entered into transactions with the businessman in good faith should not be victims of the legal conditions of bankruptcy.This conflict of interest has created many challenges in the Iranian legal system and has made balancing these conflicting interests a vital issue. Studies indicate that the lack of transparency in existing laws and conflicting court decisions have led to the violation of the rights of third parties.The main question of the present study is: "What is the status of third party rights regarding the termination and invalidity of bankrupt merchant transactions in Iranian jurisprudence, statutory law, and judicial practice?" A descriptive-analytical method has been used to answer this question.Conclusion: The results of the study indicate that Iranian laws, especially Articles 418 and 420 of the Commercial Code, have established a general framework for the invalidation of transactions, but precise criteria for distinguishing valid transactions from invalid transactions have not been provided.This has led to widespread disagreements in judicial procedures. The most important challenges in this regard are the ambiguity in the definition and judicial procedures and the lack of uniformity of procedure, the lack of adequate protection for third parties in good faith, and the possibility of abuse of the bankruptcy status by bankrupt merchants.