Corporations Act 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

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

Note: This Part applies to a sub-fund of a CCIV in a modified form: see Division 3 of Part 8B.6 (for provisions relating to Division 2B ), Division 5 of Part 8B.6 (for provisions relating to Divisions 2 and 2A ) and Division 6 of Part 8B.6 (for provisions relating to Divisions 3 , 4 , 5 and 6 ).

Division 2 - Voidable transactions  

Subdivision A - Kinds of transactions that may be voidable  

SECTION 588FD   MEANING OF UNFAIR LOAN  

588FD(1)    
A loan to a company is unfair if, and only if:

(a)    the interest on the loan was extortionate when the loan was made, or has since become extortionate because of a variation; or

(b)    the charges in relation to the loan were extortionate when the loan was made, or have since become extortionate because of a variation;

even if the interest is, or the charges are, no longer extortionate.

588FD(2)    
In determining:

(a)    whether interest on a loan was or became extortionate at a particular time as mentioned in paragraph (1)(a) ; or

(b)    whether charges in relation to a loan were or became extortionate at a particular time as mentioned in paragraph (1)(b) ;

regard is to be had to the following matters as at that time:

(c)    the risk to which the lender was exposed; and

(d)    the value of any security in respect of the loan; and

(e)    the term of the loan; and

(f)    the schedule for payments of interest and charges and for repayments of principal; and

(g)    the amount of the loan; and

(h)    any other relevant matter.