Unfair Preference Recoveries
An unfair preference recovery is an action brought by liquidator in accordance with section 588FA of the Corporations Act 2001 (Cth). An unfair preference is a payment made to a creditor of an insolvent company during the six months prior to the relation back date.
It is characterised by providing a particular creditor a priority or “preference” over other creditors. The Corporations Act allow a liquidator power to recover unfair preference recoveries to be returned to the insolvent company and then distributed to the other creditors in the company.
Elements of an unfair preference recovery
An unfair preference recovery is a payment made to a creditor at the time the company is insolvent;
- It must be an uncommercial transaction on accordance with section 588FC of the Corporations Act;
- It must be a voidable transaction under section 588FE of the Corporations Act;
- Recoverable pursuant to section 588FF of the Corporations Act.
Roser Lawyers regularly acts for liquidators in unfair preference recovery actions. This expertise in regularly acting for Australia’s leading liquidators in recovering funds provides Roser Lawyers an edge over other law firms when defending claims by creditors who have received money from a company which subsequently is placed in liquidation.
If you have received a letter from a liquidator demanding repayment of a sum of money allegedly required to be payed as an unfair preference payment. It is important to seek advice from an expert in insolvency.
At Roser Lawyers we provide creditors with a tail in plan in relation to the resolution of unfair preference recovery matters from liquidators.
A recent example and case studies is as follows:
A client received payments during six months prior to the appointment of liquidators. The client had no indication that the company was insolvent or would become insolvent as a result of the payments made.
The client engaged Roser Lawyers and we put together a strategic plan to minimise the risk to the client and resolve the claim of the liquidator.
Over a series of six months and multiple letters from and to one of the largest law firms in Australia Roser Lawyers was unsuccessful in having the liquidator completely drop the unfair preference recovery claim. Accordingly, it is vitally important that if you have received an insolvent trading claim, statement of claim or even a letter of demand that you contact our office and arrange an appointment to discuss the ramifications.
Should you have a matter concerning Unfair Preference Recoveries, do not hesitate to contact our office for a confidential discussion.