By Darrin Mitchell, Senior Associate at Matthews Folbigg in the Insolvency, Restructuring and Debt Recovery Group
Part 5.7B of the Corporations Act 2001 (Cth)(“the Act”) contains provisions that allow a liquidator to seek orders that void certain transactions undertaken by a company whilst it is insolvent, or that are not in the company’s interests. The kinds of transactions that will be investigated by a liquidator include:
- Preferential payment – see section 588FA of the Act;
- Uncommercial transactions – see section 588FB of the Act;
- Insolvent transactions – see section 588FC of the Act;
- Insolvent transactions – see section 588FD of the Act;
- Unreasonable director-related transactions – see section 588FDA of the Act; and
- Creditor-defeating dispositions – see section 588FDB of the Act.
The period of scrutiny of the company’s transactions prior to liquidation for each category of voidable transaction is set out in section 588FE of the Act.