The Government's Insolvency Working Group (Working Group)
has this week issued its second report, which includes its
recommendations on changes to the voidable transactions regime.
Two key changes are proposed:
- A reduction in the period of vulnerability for voidable
transaction clawbacks from two years to six months (where the
debtor company and creditor are not related parties); and
- Narrowing the scope of the creditor's defence under section
296(3) by repealing the "gave value" part of the test.
This change would increase the protection provided to creditors as
a whole by reinstating the "altered position" test.
While the reduction in the clawback period is to be welcomed,
overall these changes may make it more difficult for creditors to
resist a liquidator's application to recover property that is
the subject of a voidable transaction.
