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CORPORATIONS ACT 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.7B - RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY  

Division 2 - Voidable transactions  

SECTION 588FE  VOIDABLE TRANSACTIONS  

588FE(1)  [Effect]  

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If a company is being wound up:


(a) a transaction of the company may be voidable because of any one or more of subsections (2) to (6) if the transaction was entered into on or after 23 June 1993; and


(b) a transaction of the company may be voidable because of subsection (6A) if the transaction was entered into on or after the commencement of the Corporations Amendment (Repayment of Directors' Bonuses) Act 2003.

[CCH Note: The Corporations Amendment (Repayment of Directors' Bonuses) Act 2003 commenced on 11 April 2003.]

588FE(2)  [Insolvent transaction]  


The transaction is voidable if:


(a) it is an insolvent transaction of the company; and


(b) it was entered into, or an act was done for the purpose of giving effect to it:


(i) during the 6 months ending on the relation-back day; or

(ii) after that day but on or before the day when the winding up began.

588FE(2A)  [Transactions of company under administration]  

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The transaction is voidable if:


(a) the transaction is:


(i) an uncommercial transaction of the company; or

(ii) an unfair preference given by the company to a creditor of the company; or

(iii) an unfair loan to the company; or

(iv) an unreasonable director-related transaction of the company; and


(b) the company was under administration immediately before:


(i) the company resolved by special resolution that it be wound up voluntarily; or

(ii) the Court ordered that the company be wound up; and


(c) the transaction was entered into, or an act was done for the purpose of giving effect to it, during the period beginning at the start of the relation-back day and ending:


(i) when the company made the special resolution that it be wound up voluntarily; or

(ii) when the Court made the order that the company be wound up; and


(d) the transaction, or the act done for the purpose of giving effect to it, was not entered into, or done, on behalf of the company by, or under the authority of, the administrator of the company.

588FE(2B)  [Transactions of company subject to DOCA]  

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The transaction is voidable if:


(a) the transaction is:


(i) an uncommercial transaction of the company; or

(ii) an unfair preference given by the company to a creditor of the company; or

(iii) an unfair loan to the company; or

(iv) an unreasonable director-related transaction of the company; and


(b) the company was subject to a deed of company arrangement immediately before:


(i) the company resolved by special resolution that it be wound up voluntarily; or

(ii) the Court ordered that the company be wound up; and


(c) the transaction was entered into, or an act was done for the purpose of giving effect to it, during the period beginning at the start of the relation-back day and ending:


(i) when the company made the special resolution that it be wound up voluntarily; or

(ii) when the Court made the order that the company be wound up; and


(d) the transaction, or the act done for the purpose of giving effect to it, was not entered into, or done, on behalf of the company by, or under the authority of:


(i) the administrator of the deed; or

(ii) the administrator of the company.

588FE(3)  [Insolvent and uncommercial transaction]  


The transaction is voidable if:


(a) it is an insolvent transaction, and also an uncommercial transaction, of the company; and


(b) it was entered into, or an act was done for the purpose of giving effect to it, during the 2 years ending on the relation-back day.

588FE(4)  [Insolvent transaction to which related entity a party]  


The transaction is voidable if:


(a) it is an insolvent transaction of the company; and


(b) a related entity of the company is a party to it; and


(c) it was entered into, or an act was done for the purpose of giving effect to it, during the 4 years ending on the relation-back day.

588FE(5)  [Insolvent transaction for purpose of defeating creditors]  


The transaction is voidable if:


(a) it is an insolvent transaction of the company; and


(b) the company became a party to the transaction for the purpose, or for purposes including the purpose, of defeating, delaying, or interfering with, the rights of any or all of its creditors on a winding up of the company; and


(c) the transaction was entered into, or an act done was for the purpose of giving effect to the transaction, during the 10 years ending on the relation-back day.

588FE(6)  [Unfair loan]  


The transaction is voidable if it is an unfair loan to the company made at any time on or before the day when the winding up began.

588FE(6A)  [Unreasonable director-related transaction]  

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The transaction is voidable if:


(a) it is an unreasonable director-related transaction of the company; and


(b) it was entered into, or an act was done for the purposes of giving effect to it:


(i) during the 4 years ending on the relation-back day; or

(ii) after that day but on or before the day when the winding up began.

588FE(7)  [Interpretation]  


A reference in this section to doing an act includes a reference to making an omission.

 



This information is provided by CCH Australia Limited. View the disclaimer and notice of copyright.
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