Trade creditor survived an unfair preference

A trade creditor has very recently been successful in setting aside an order of a Magistrate in that certain payments received were not unfair preferences under the Corporations Act.

The claim was for only about $24k.

The key points that the court took from the evidence:

(1) debts ranged from between 21-31 days outside trading terms, but within industry norm trading terms;

(2) no round, or irreconcilable payments;

(3) no evidence of rumours or information given to the trade creditor to suggest the company was insolvent;

(4) the trade creditor did further jobs for the company after being paid;

(5) the company was working on a big project;

(6) although the trade creditor had stopped supply, the stop was allegedly due to the company’s annoyance with him, not a lack of payment;

(7) the trade creditor had used the mechanisms under BCISPA to clawback monies, but that was only due to (6); and

(8) indebtedness was at its highest during the 6 month relation-back period.

From the above 8 points, the court balanced the competing indicia, and found that the trade creditor did not, or should not, have suspected the company’s insolvency.

Therefore, the order from the Magistrates Court was set aside.

What do you think, should they have known or not?

https://jade.io/j/#!/article/594481?at.hl=%5B2018%5D+SADC+70

#SVVoidables #ithinknot

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