The main distinction between the Bankruptcy Act 1966 (Cth) and the Corporations Act 2001 (Cth) is that in most circumstances you do not have to prove that the Bankrupt was insolvent at the time of the transaction.
The responsibility of a Bankruptcy Trustee is to distribute a Bankrupt’s assets, fairly and evenly to all creditors. If a voidable transaction has taken place prior to the appointment of a Bankruptcy Trustee, then the Bankruptcy Trustee has the power to avoid these transactions under the Bankruptcy Act 1966 (Cth).
For all voidable transaction claims, the Bankruptcy Trustee has 6 years from the first act of Bankruptcy (as defined below) to commence proceedings for a voidable transaction under the Bankruptcy Act 1966 (Cth).
Uncommercial transactions
These are the most common type of voidable transactions in Bankruptcy’s and commonly take place when a debtor is aware that they will soon be declared bankrupt. They transfer their valuable assets or money to a related party at an undervalue in attempt to conceal it from becoming part of the Bankrupts’ estate. Examples of such transactions include purchasing assets for greater than market value in order to transfer money to a related party and selling valuable assets for less than market value.
SV Voidables are well experienced in recovering and defending these types of transactions. See the following article as an example.
Avoidance of preferences
Preferences occur where a creditor has received an advantage over other creditors, by receiving payment (or other type of transaction) for their outstanding liabilities and does so in circumstances where they knew, or ought to have known, that the Bankrupt was insolvent.
Transactions where consideration given to a third party
This is where a transfer of property has taken place between two parties (the Bankrupt and the transferee) and subsequently, the transferee gives some or all of the consideration for that transfer to a third party.
Under Section 121A of the Bankruptcy Act 1966, the third party can be the subject of recovery actions by a Bankruptcy Trustee where that consideration should have been paid to the Bankrupt.
Transfers to defeat creditors
This is where a person (who is subsequently declared bankrupt) transfers property to another person with an intention to protect that property from becoming a part of their Bankrupt Estate and subsequently being distributed to creditors or with an intention to defeat or delay the proper distribution of that property to creditors.
How can SV Partners help?
In order for a debtor to propose a Personal Insolvency Agreement, they must appoint a Registered Trustee, such as SV Partners. Once SV Partners is appointed, we conduct our investigations, report to creditors on your behalf and structure a proposal that is beneficial to all parties involved.
SV Partners will guide you through the process, providing support every step along the way of administering your Personal Insolvency Agreement. Our services are designed to alleviate the pressures you may be facing from creditors.
For more information about Personal Insolvency Agreements, visit our FAQ section. Alternatively, to discuss your situation and see how our team can help, contact us on our confidential assist line on 1800 246 801 for an obligation free consultation.