#SVVoidables by Matthew Hudson
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Yesterday I posted about the new creditor defeating dispositions (‘CDD’). Today I am looking at defences. Imagine Co A sells its tyre shop business to Co B and nearly 1 year later enters liquidation. If Co A Liquidator pursued Co B for a CDD, what defences are available: 1. Commerciality of recovering monies from Co…
And here I thought CD’s were going the way of the dodo, insolvency law now has a CDD, or ‘creditor defeating disposition’, as a weapon to combat illegal phoenixing. The law came into effect on 18 February 2020, but ONLY applies to dispositions entered on or after that date. What is a CDD? See s…
Really disappointed to see that the Commonwealth Treasury didn’t run with my idea of excluding the set-off defence (per s553C) from the newly announced illegal phoenixing offences under the Corporations Act. It would solve so many issues if s553C(3) was introduced into the Corporations Act, which could say something along the lines of: “For the avoidance…
I was recently inspired to read the newly proposed phoenix law in full after seeing an announcement from ASIC about Mr Paul Joshua Flackmorr; a director recently convicted of illegal pheonixing. Under the current law, a criminal offence of illegal pheonixing carries with it a maximum penalty of 100 penalty units or 2 year imprisonment, or…
You can set-off your legal debt of $1 million, despite having actual notice of insolvency, according to a recent NSW Supreme Court case. Justice White was at pains to explain his “disquiet” in ruling in such a way, commenting that the case must be decided on a “most unsatisfactory basis”. The reason for His Honour’s displeasure…
Breaking: Set-off (in 553C) applies to unfair preferences, according to Justice Markovic in the Federal Court proceedings handed down today. Her Honour was minded to just follow the Re Parker case and the Smith v Bone case, which allowed set-off. Her Honour did remark that the Liquidator’s submissions did not deal substantially with this issue, because, as was found…
Façade Treatment v Brookfield Multiflex [2016] VSCA is “plainly wrong” and “should not be followed” according to Justice Stevenson in His Honour’s single-court judgment handed down yesterday. The Façade case had held that the Building and Construction Industry Security of Payment Act (“BCISPA”) does not continue to apply once the subcontractor enters Liquidation. Yesterday’s case, called Seymour…
Following on from my post yesterday: A common frustration for insolvency practitioners and creditors occurs where a debtor owes money to a company in liquidation, but for various reasons (sometimes unreasonably) those monies cannot be realised for the benefit of creditors. The debtor may raise liquidated damages, breach of contract, defects, etc … all of which…
Imagine Company A owes Company B $100k, and B owes A $50k. You’d expect the two companies could just set-off those debts so that A only had to pay $50k. However, what happens if B goes into Liquidation before A exercises its right to set-off? Further imagine that bank (“C”) is a secured creditor, having properly…
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