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 E - Various rules about voidable transactions  

SECTION 588FGB   DEFENCES IN PROCEEDINGS UNDER SECTION 588FGA  

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

588FGB(3)    
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)    
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(4A)    

Subsections (3) and (4) of this section do not apply if the order mentioned in subsection 588FGA(1) was made wholly or partly because the condition in 588FE(6B)(b)(iii) was met.

588FGB(5)    
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)    
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)    
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 or a restructuring practitioner for the company; and

(b)    when that action was taken; and

(c)    the results of that action.