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ARTICLE · 30 JULY 2022

TGIF: Liquidating debts: Three good reasons to settle for less

Corrs Chambers Westgarth
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These two decisions point to the three reasons that will often lead to a decision to compromise a debt.

AustraliaInsolvency/Bankruptcy/Re-Structuring
Cameron Cheetham
Cameron Cheetham
Mark Wilks
Mark Wilks
Craig Ensor
Craig Ensor
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This week's TGIF considers the latest of two recent Federal Court decisions approving the compromise of debts owed to a company in liquidation, on the application of liquidators pursuant to section 477(2A) of the Corporations Act 2001 (Cth) and on confidential terms.

Key takeaways

  • Liquidators seeking to compromise a debt of more than $100,000 without creditor or COI approval can apply for court approval under section 477(2A) of the Corporations Act 2001 (Cth), combined with an order under section 37AF of the Federal Court of Australia Act 1976 (Cth) to maintain confidentiality.

  • In assessing whether the compromise is in the best interests of creditors, liquidators can investigate the debtor's financial position to determine:

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