Corporate insolvency - the Australian statutory framework

John Warde, "Corporate insolvency: preferences and uncommercial transactions - an overview", Australian Banking and Finance Law Bulletin, January 2005

This article, the first in a three-part series, considers the Australian statutory framework in the area of insolvency relating to preferences and uncommercial transactions and looks at some recent decisions in the Australian courts.

The Corporations Act 2001 (Cth) gives liquidators a wide range of powers to set aside or vary transactions that have been entered into by insolvent companies that are subsequently wound up.

Among other powers, a liquidator can seek to set aside what are known as "unfair preferences" and "uncommercial" transactions, and recover the proceeds for the benefit of the general body of unsecured creditors.

In particular, this article looks at:

1. the powers of the court to set aside voidable transactions;



2. who receives the benefit of property after a transaction is avoided by a liquidator;



3. judicial discussion about the power of the court to make an order requiring the relevant moneys to be paid or the property transferred to the company rather than the liquidator;



4. when a transaction is a voidable transaction; and



5. when a transaction is an insolvent transaction.

The Australian insolvency framework is, of course, of relevance in New Zealand when considering the similar concepts that are set out in Part 16 of our Companies Act 1993.

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