Creditors - don't forget section 37A!

Introduction

A recent High Court decision highlights the breadth of the scope of section 37A of the Conveyancing Act 1919 (NSW), a long standing provision having its roots in an Elizabethan era statute which essentially prohibits dispositions of property by a debtor with the intent to defraud creditors. In doing so, this section (which has also been substantially incorporated into the laws of other Australian states) complements other similar statutory remedies available to creditors seeking redress from recalcitrant debtors. These include section 121 of the Bankruptcy Act 1966 (Cth), in the case of individual debtors and section 588FE of the Corporations Act 2001 (Cth), in the case of corporate debtors. However, section 37A a significant advantages over these provisions. The debtor need not necessarily be insolvent at or shortly after the time of this section's application.