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Hamersley v Forge: the limitations of set-off rights in a liquidation scenario

In the event of a contractual counterparty going into liquidation, whether or not a trade counterparty may claim set-off against debts owed to the insolvent counterparty can dramatically affect the commercial position of the account debtor. This was recently highlighted in the decision of Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers appointed) [2017] WASC (2 June 2017).

What does this mean for you?

Australia, Insolvency & Restructuring, Litigation, King & Wood Mallesons, Liquidation
De-facto directors: Case 2: F Options Limited: Who is actually in charge?

The recent case of F Options Ltd v Prestwood Properties Ltd concerned the setting aside of a transaction as a preference under section 239 of the Insolvency Act 1986.

A preference arises when a company's creditor is put in a better position than they would otherwise have been in the event of the company's insolvency. Transactions may be a preference whether or not the parties are connected, but where it can be shown that there is a connection within section 249 of the Insolvency Act 1986, two important advantages are gained:

United Kingdom, Company & Commercial, Insolvency & Restructuring, Litigation, BDB Pitmans LLP, Unsecured debt, Board of directors, Insolvency Act 1986 (UK)