In the 1500s, debtors in England would avoid paying their debts by transferring property to friends or family as a gift or for undervalue, move to a sanctuary such as church land, wait for their creditors to exhaust their efforts or come to a favourable settlement of the debt, and then return and take a re-transfer of the property. This was a fraud on the creditors.

To prevent this mischief, in 1571, Parliament enacted the Fraudulent Conveyances Act (13 Eliz I, c 5), known as the Statute of 13 Elizabeth, and in Australia, as the Elizabethan Statute. It provided:

I have written approximately 130 Helix Legal articles where I have focused on conveying information to readers concisely, factually and always looking to be positive.

I do not like ‘shock and awe’ articles where the clear intent is to scare people into doing something. There are much better ways to engage with people.

However, on the other hand, I have never shied away from raising awareness on significant industry issues that are confronting, and indeed very uncomfortable to talk about.

In the wake of the Victorian Court of Appeal’s decision in Cant v Mad Brothers Earthmoving [2020] VSCA 198 (‘Cant’), the Supreme Court of New South Wales’ recent decision in Re Western Port Holdings provides further encouragement for liquidators to pursue unfair preference claims with respect to third party payments and payments made during the operation of a deed of company arrangement (DOCA).

Key takeaways

Times are changing rapidly with the current flow of Coronavirus measures introduced to support businesses in debt and distress.

We take a look at what creditors can (and can’t) do to help better protect their position.

I’m owed money. What can I do?

Certain recent government measures may impede your ability to take recovery or enforcement action at the present time. The good news is that many avenues remain available.

You cannot (in some cases):

Mills Oakley is a leading national law firm with offices in Melbourne, Sydney, Brisbane, Canberra and Perth. With over 100 partners and more than 670 staff, we offer strong expertise across all key commercial practice areas.

From origins in Melbourne in 1864, Mills Oakley has grown to become a domestic leader in legal services with a client base of ASX-200 listed companies, mid-sized corporations, the public sector and not-for-profit organisations.

In an unprecedented move the Federal Government has announced temporary changes to some aspects of existing insolvency laws as part of the plan to try and keep businesses operating during this unique health crisis time.

Insolvent Trading

The Australian Government has announced temporary measures to curtail the impact of COVID-19 on Australian businesses by lessening the threat of otherwise viable businesses being placed into external administration. In part, these measures seek to prevent the winding up of companies which are experiencing short term financial distress and protect company directors from potential personal liability in order to incentivise continued trade through the COVID-19 health crisis. Similar temporary relief measures extend to individuals in financial difficulty.

In its recent decision in the ongoing Solar Shop litigation,[1] the Full Federal Court established two key principles which will have significant ongoing implications for the conduct of unfair preference claims:

The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2019 (Cth) (Amending Act) passed into law on 17 February 2020, over a year after it was first introduced to Parliament.   

Placing phoenix activity firmly in its crosshairs, the Amending Act introduces long anticipated reforms to Australia’s efforts to curb phoenix activity.  

Background 

In the recent decision of In the matter of Parkway One Pty Limited (in liquidation) [2019] NSWSC 1495 (Parkway), Rees J dismissed an application to terminate the winding up of Parkway One Pty Ltd (in liquidation) (the Company) due to inconclusive evidence as to the solvency of the Company and, having regard to the non-compliance by its director of her statutory duties and the likelihood of the Company not being able to service the current and foreseen indebtedness, her Honour held that it would be contrary to commercial morality to terminate the wi