$10k prefo – too low!?!

What amount is too low for an unfair preference claim to be taken to court by a Liquidator? $10,000? $20,000? $30,000? More?

Obviously the lower the amount of the claim, the higher the proportion of costs will be.

In a case handed down yesterday, a Liquidator in WA was successful in the Federal Court of Australia for an unfair preference claim totalling just $10,400.

Considering filing fees on their own represented 36% of the total claim, it’s difficult to imagine that creditors will receive any benefit from the claim made (after subtracting costs and fees). 

The Federal Court, in effect, ruled that the trade creditor could not rely upon the defence of good faith because the repayment arrangement they entered into with the company:

– was only for $1,300 per week for 13 weeks, which should have signified the company had cash flow difficulties; and

– the repayment arrangement had been defaulted upon.

What’s your views? 


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