The Voidable Transaction Regime – A summary

The voidable transaction regime under Part 5.7B of the Corporations Act 2001 (Cth) (the Act) provides a framework for liquidators to pursue recovery action against parties who have received property or some form of benefit from an insolvent company. In turn, the mechanisms and processes under the regime often provide uncertainty in commercial dealings and other transactions of a company and provides a further layer of anxiety when navigating through cashflow problems. An understanding of when the voidable transaction provisions will apply and operate will assist in structuring legitimate transactions of a company and ensure that they do not fall foul of the regime.

What are voidable transactions and why?