A voidable transaction is a transfer of property or assets owned by the debtor to a third party that causes detriment to creditors. By voiding these transactions, a Trustee can recover assets that would otherwise have been available to creditors, ensuring an equitable distribution of assets to all creditors.

Under the Bankruptcy Act 1966, there are five primary transactions which may be voided by the Trustee. These include:

• Section 120: Undervalued transactions

• Section 121: Transactions to defeat creditors

• Section 121A: Transactions with consideration to third parties

• Section 122: Unfair Preferences

• Section 128B and C: Superannuation contributions made to defeat creditors

WCT Advisory is a specialist financial advisory firm primarily concentrating on advising company directors and business owners when facing financial distress, as well as undertaking formal insolvency appointments. In addition to that primary focus, the firm also undertakes some corporate finance engagements including capital raising, due diligence and transaction advisory.

After 4 years, WCT Advisory now have offices in both Brisbane and Adelaide with three main service areas:

• Restructuring Advisory

• Insolvency

• Corporate Finance

This is the eighth in our series of articles at informing directors of their duties and options for small to medium enterprises if faced with insolvency. This particular article will deal with liquidations and the role of a liquidator.

A liquidator can be appointed by either a creditor (through a Court application) or voluntarily by members of the company. A liquidation can be either solvent (i.e. all liabilities are paid and there is a surplus for shareholders) or insolvent (i.e. when there are insufficient assets to pay all liabilities).

Article published in the Courier Mail Thursday, 15th September 2022.