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 588FDB   MEANING OF CREDITOR-DEFEATING DISPOSITION  

588FDB(1)    
A disposition of property of a company is a creditor-defeating disposition if:

(a)    the consideration payable to the company for the disposition was less than the lesser of the following at the time the relevant agreement (as defined in section 9 ) for the disposition was made or, if there was no such agreement, at the time of the disposition:

(i) the market value of the property;

(ii) the best price that was reasonably obtainable for the property, having regard to the circumstances existing at that time; and

(b)    the disposition has the effect of:

(i) preventing the property from becoming available for the benefit of the company ' s creditors in the winding-up of the company; or

(ii) hindering, or significantly delaying, the process of making the property available for the benefit of the company ' s creditors in the winding-up of the company.

Extensions of concept of disposition

588FDB(2)    
For the purposes of this section and provisions of this Act that refer to a creditor-defeating disposition, if a company does something that results in another person becoming the owner of property that did not previously exist, the company is taken to have made a disposition of the property.

588FDB(3)    
For the purposes of this section and provisions of this Act that refer to a creditor-defeating disposition, if:

(a)    a company makes a disposition of property to another person; and

(b)    the other person gives some or all of the consideration for the disposition to a person (the third party ) other than the company;

the company is taken to have made a disposition of the property constituting so much of the consideration as was given to the third party.