In this article we explain when a transaction might be voidable under that section, how these transactions differ from another type of voidable transaction, uncommercial transactions, and how liquidators pursue claims under this section.
Liquidators have a set of powers under the Corporations Act 2001 (Cth) (the Act) known as ‘voidable transactions’ (sometimes also known as ‘avoidance provisions’), which allow the liquidator to ‘claw back’ certain transactions in the case of an insolvent winding-up.
Running a business can be tough and no matter how prepared you are, there will always be hurdles along the path. As such, recognising the type of problem that you’re dealing with is vital in determining what strategy should be implemented to respond to a financial crisis. A helpful starting point is to consider whether the problem is an inside problem or an outside problem.
In insolvency, a liquidator sometimes seeks to recover money from a creditor on the grounds that the creditor has received an ‘unfair preference’ in a payment from the debtor company. Here we explain how the ‘running account’ principle can be used by a creditor to push back against a liquidator’s claim of unfair preference.
When your business is in trouble you often feel as though the end is inevitable. But even in the toughest of situations, there is often still options available.
What happens when a corporate trustee of a trading trust goes into liquidation? Here we look at the current state of the law and the uncertainty around the power of liquidators in this situation.
Is your business struggling? Are you losing significant market share or are your margins too small? What next?
Simplified debt restructuring is a new process available as of 1 January 2021 to support financially distressed small businesses. In simplified debt restructuring, an independent professional known as a ‘small business restructuring practitioner’ is appointed to a distressed debtor company to assist with restructuring the company’s debt via development of a ‘restructuring plan’.
In this article, we look at the definition of ‘unfair preference’ claims — a mechanism used by liquidators to claw back some prior payments to creditors. We also look at the available defences for an unfair preference claim, and how the new ‘simplified liquidation’ procedure for small businesses deals with unfair preference claims.
Wage theft is the underpayment of employees. Wage theft can occur in a number of ways, for example underpaying wages, not granting entitlements or refusing to pay penalty rates, superannuation, overtime or commissions.
An important part of the personal bankruptcy process in Australia is the ability of those overseeing the process to ‘examine’ the individual undergoing bankruptcy or any other relevant person. This is the ability to question that person or those persons, under oath, about their financial affairs, fraud or involvement with the bankrupt. This power is contained within section 77C of the Bankruptcy Act 1966 (Cth) and is sometimes known as a ‘private examination’.
Having creditors is a necessary element of business. But those lines of credit extended to your business do not come without some reciprocal obligations. Respecting your creditors should always be a priority. It is vital that you maintain a strong creditor-debtor relationship, even as situations change and become more difficult.