On 24 March 2020, the Federal Government passed the Coronavirus Economic Response Package Omnibus Act 2020 (Cth) (Act). As a part of the Act, insolvency and corporations laws have been temporarily amended in light of the financial challenges businesses are facing in the wake of COVID-19. The changes made are intended to avoid unnecessary insolvencies and bankruptcies by providing a safety net for companies and their directors during the pandemic. This article will discuss the key changes. [Read more…]
insolvency
The running account defence to an unfair preference claim
June 23, 2019 by
You continued to supply a customer goods on credit, notwithstanding that despite payments being made, the customer’s overall level of indebtedness remained basically the same. The customer is then placed into liquidation. You are owed thousands of dollars. Then, to make matters worse, you receive a letter from a liquidator demanding under threat of legal action that you pay to him the money you received on the basis the payments received was an Unfair Preference. [Read more…]
Unfair preferences and the set-off defence
June 18, 2019 by
Under section 588FA of the Corporations Act 2001 (Cth) (Act) an unfair preference is defined as a transaction, such as payment of an outstanding debt, between a company and an unsecured creditor which results in that unsecured creditor receiving more than it would have received if it had to prove in the winding up of the debtor company. It is unfair because the payment results in the net value of the assets of the debtor company being reduced, to the detriment of the body of unsecured creditors as a whole. One of the rarer defences is the Set-Off to an unfair preference claim. [Read more…]
Unfair preferences – the Doctrine of Ultimate Effect
April 4, 2019 by
Under section 588FA of the Corporations Act 2001 (Cth), an unfair preference is defined as a transaction, such as payment of an outstanding debt, between a company and a unsecured creditor which results in that unsecured creditor receiving more than it would have received if it had to prove in the winding up of the debtor company. It is unfair because the payment the debt results in the net value of the assets of the debtor company being reduced, to the detriment of the body of unsecured creditors as a whole. [Read more…]
What kind of documents can a liquidator get access to and from whom?
September 9, 2018 by
Liquidators have various tools available to locate the assets of a company in liquidation and to trace company monies they suspect may been “siphoned away”. These tools include applying to the Court for the officers of the company and related entities to “deliver up” various documents and for those parties to then submit to public examination before the Court in respect of the company’s examinable affairs. The recent Federal Court decision of Cathro, in the matter of Lidcombe Plastering Services Pty Limited (in liq) [2018] FCA 1138 (Cathro) considered the power to compel a related entity to produce documents relevant to the liquidation of a company prior to a public examination. [Read more…]
