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ARTICLE · 23 NOVEMBER 2011

Preference claims – make sure you protect your business

Colin Biggers & Paisley
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Preference actions ensure that the assets of an insolvent person or company are distributed equally among the creditors.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Peter Harkin
Peter Harkin

In brief – Preference claims intended to prevent favouritism

The reason for preference actions is to ensure that the assets of an insolvent person or company are distributed equally among the creditors and that no one creditor receives a preference over the others. However, if your business receives a preference claim from a liquidator, don't assume you can't fight back.

Beware of debtors going into liquidation

It is not uncommon for a diligent credit controller to chase and recover from a recalcitrant principal or head contractor debts which are well and truly past their due date, only then to find that the debtor goes into liquidation and the liquidator seeks to claw the money back.

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