Clawing back contributions – Bankrupt Estates: Superannuation Edition

Prior to declaring bankruptcy, an individual may transfer funds to a regulated superannuation fund to avoid those monies being caught by the hands of a creditor. However, there is potential for those transactions to be considered void pursuant to the Bankruptcy Act 1966 (Cth) (the Act), such that the trustee in bankruptcy may 'claw back' the funds for the benefit of and to be distributed amongst creditors.

Voidable superannuation contributions

Section 128B of the Act deals with superannuation contributions made to defeat creditors. The main points are as follows:

• Transfers that are void: A transfer made by a person who later becomes bankrupt is void as against the trustee in bankruptcy in the transferor's bankruptcy if the transfer is made by way of a contribution to an eligible superannuation plan.