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 588FGB   DEFENCES IN PROCEEDINGS UNDER SECTION 588FGA  

588FGB(1)  [Effect of section]  

This section has effect for the purposes of:

(a)  proceedings to recover from a person an amount payable under subsection 588FGA(2); and

(b)  proceedings under subsection 588FGA(5) against a person of the kind referred to in paragraph 588FGA(5)(d).

588FGB(2)  [``payment time'']  

The time when the payment referred to in subsection 588FGA(1) was made is called the payment time .

588FGB(3)  [Defence of reasonable grounds to expect solvency]  

It is a defence if it is proved that, at the payment time, the person had reasonable grounds to expect, and did expect, that the company was solvent at that time and would remain solvent even if it made the payment.

588FGB(4)  [Reliance on another person]  

Without limiting the generality of subsection (3), it is a defence if it is proved that, at the payment time, the person:

(a)  had reasonable grounds to believe, and did believe:

(i) that a competent and reliable person ( ``the other person'' ) was responsible for providing to the first-mentioned person adequate information about whether the company was solvent; and

(ii) that the other person was fulfilling that responsibility; and

(b)  expected, on the basis of information provided to the first-mentioned person by the other person, that the company was solvent at that time and would remain solvent even if it made the payment.

588FGB(5)  [Defence of illness]  

It is a defence if it is proved that, because of illness or for some other good reason, the person did not take part in the management of the company at the payment time.

588FGB(6)  [Defence of having taken reasonable steps, etc]  

It is a defence if it is proved that:

(a)  the person took all reasonable steps to prevent the company from making the payment; or

(b)  there were no such steps the person could have taken.

588FGB(7)  [Relevance of actions to subsec (6) defence]  

In determining whether a defence under subsection (6) has been proved, the matters to which regard is to be had include, but are not limited to:

(a)  any action the person took with a view to appointing an administrator of the company; and

(b)  when that action was taken; and

(c)  the results of that action.