THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

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

Division 2 - Voidable transactions

SECTION 588FG   TRANSACTION NOT VOIDABLE AS AGAINST CERTAIN PERSONS  

588FG(1)  [Person received no benefit or benefit in good faith]  

A court is not to make under section 588FF an order materially prejudicing a right or interest of a person other than a party to the transaction if it is proved that:

(a)  the person received no benefit because of the transaction; or

(b)  in relation to each benefit that the person received because of the transaction:

(i) the person received the benefit in good faith; and

(ii) at the time when the person received the benefit:

(A) the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and

(B) a reasonable person in the person's circumstances would have had no such grounds for so suspecting.

588FG(2)  [Good faith and no reasonable grounds to suspect insolvency]  

A court is not to make under section 588FF an order materially prejudicing a right or interest of a person if the transaction is not an unfair loan to the company and it is proved that:

(a)  the person became a party to the transaction in good faith; and

(b)  at the time when the person became such a party:

(i) the person had no reasonable grounds for suspecting that the company was insolvent at that time or would become insolvent as mentioned in paragraph 588FC(b); and

(ii) a reasonable person in the person's circumstances would have had no such grounds for so suspecting; and

(c)  the person has provided valuable consideration under the transaction or has changed his, her or its position in reliance on the transaction.

588FG(3)  [Discharge of tax is valuable consideration]  

For the purposes of paragraph (2)(c), if an amount has been paid or applied towards discharging to a particular extent a liability to pay tax, the discharge is valuable consideration provided:

(a)  by the person to whom the tax is payable; and

(b)  under any transaction that consists of, or involves, the payment or application.

588FG(4)  [``tax'']  

In subsection (3):

``tax'' means tax (however described) payable under a law of the Commonwealth or of a State or Territory, and includes, for example, a levy, a charge, and municipal or other rates.

588FG(5)  [Valuable consideration provided by Commonwealth]  

For the purposes of paragraph (2)(c), if an amount has been paid or applied towards discharging to a particular extent a liability to the Commonwealth, or to the Commissioner of Taxation, that arose under or because of an Act of which the Commissioner has the general administration, the discharge is valuable consideration provided by the Commonwealth, or by the Commissioner, as the case requires, under any transaction that consists of, or involves, the payment or application.

588FG(6)  [Application of subsec (3) and (5)]  

Subsections (3) and (5):

(a)  are to avoid doubt and are not intended to limit the cases where a person may be taken to have provided valuable consideration under a transaction; and

(b)  apply to an amount even if it was paid or applied before the commencement of this subsection.