Payments to the ATO for DOCA period debts are potentially unfair preferences

BREAKING: payments made by a company previously under a Deed Administration (or DOCA) to the ATO are recoverable as unfair preferences (once in liquidation) and not ‘by, or under the authority’ of the Deed Administrators within the meaning of s 588FE(2B)(d) Corporations Act.

From the Federal Court today.

Tax Voidables

These payments relate to post-VA debts owed to the ATO, as the Company continued to trade during the Deed of Company Arrangement (DOCA) period.

… even if the DOCA expressly requires that the company meet its ongoing taxation obligations (as the ATO normally requires before voting in favour of them)

… even though the extrinsic material from recommendation 51 of ‘CAMAC June 1998 Report’, was expressly of the view that these situations are not recoverable as voidable transactions

I think this is the correct decision, but is certainly a controversial topic.

More to come when I get some spare time on the weekend 🙂 but here is a link to the case for those eagerly interested.

#svvoidables #insolvency #DOCA

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