The usefulness of 468 void dispositions

If, after an external administrator is appointed, unauthorised money is paid out of the company’s bank account to a creditor, then there is meant to be quite an easy claw-back mechanism in s 468 of the Corporations Act for a Liquidator to void that transaction.

But it’s not so simple.

The Liquidator must be appointed by the Court (and not any court, only the Supreme or Federal – expensive!).

It is particularly annoying, as a mate recently found out, where the money is paid out after the VA’s appointment and they (or creditors) cannot just place the company into a creditors voluntarily liquidation and claw-back those monies.

Instead that Liquidator would need to apply to Court under section 461 to change the CVL to a Court Liquidation.

Why make it so hard?

Here are some easy fixes for Kelly O’Dwyer MP to consider:

1. change the reference from ‘Court’ to ‘court’;

2. allow all types of external administrators to apply to court to void the disposition; and

3. put the burden of proof on the defendant;

4. explicitly state that the defendant cannot set-off these monies via section 553C against monies owed to them; and

5. (possibly) impose a penalty or indemnity cost, if the defendant acted unreasonably or is uncooperative. 

To my followers, what do you think?

#SVVoidables

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