THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

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

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Division 2 - Voidable transactions

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SECTION 588FD   UNFAIR LOANS TO A COMPANY  

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588FD(1)  [What is unfair loan]  

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.

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588FD(2)  [Matter to which regard to be had]  

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.

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