Voidable transactions

292 Insolvent transaction voidable

(1)

A transaction by a company is voidable by the liquidator if it—

(a)

is an insolvent transaction; and

(b)

is entered into within the specified period.

(2)

An insolvent transaction is a transaction by a company that—

(a)

is entered into at a time when the company is unable to pay its due debts; and

(b)

enables another person to receive more towards satisfaction of a debt owed by the company than the person would receive, or would be likely to receive, in the company’s liquidation.

(3)

In this section, transaction means any of the following steps by the company:

(a)

conveying or transferring the company’s property:

(b)

creating a charge over the company’s property:

(c)

incurring an obligation:

(d)

undergoing an execution process:

(e)

paying money (including paying money in accordance with a judgment or an order of a court):

(f)

anything done or omitted to be done for the purpose of entering into the transaction or giving effect to it.

(4)

In this section, transaction includes a transaction by a receiver, except a transaction that discharges, whether in part or in full, a liability for which the receiver is personally liable under section 32(1) or (5) of the Receiverships Act 1993 or otherwise personally liable under a contract entered into by the receiver.

(4A)

A transaction that is entered into within the restricted period is presumed, unless the contrary is proved, to be entered into at a time when the company is unable to pay its due debts.

(4B)

Where—

(a)

a transaction is, for commercial purposes, an integral part of a continuing business relationship (for example, a running account) between a company and a creditor of the company (including a relationship to which other persons are parties); and

(b)

in the course of the relationship, the level of the company’s net indebtedness to the creditor is increased and reduced from time to time as the result of a series of transactions forming part of the relationship;

then—

(c)

subsection (1) applies in relation to all the transactions forming part of the relationship as if they together constituted a single transaction; and

(d)

the transaction referred to in paragraph (a) may only be taken to be an insolvent transaction voidable by the liquidator if the effect of applying subsection (1) in accordance with paragraph (c) is that the single transaction referred to in paragraph (c) is taken to be an insolvent transaction voidable by the liquidator.

(5)

For the purposes of subsections (1) and (4B), specified period means—

(a)

the period of 2 years before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

(b)

in the case of a company that was put into liquidation by the court, the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order was made; and

(c)

if—

(i)

an application was made to the court to put a company into liquidation; and

(ii)

after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

the period of 2 years before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

(6)

For the purposes of subsection (4A), restricted period means—

(a)

the period of 6 months before the date of commencement of the liquidation together with the period commencing on that date and ending at the time at which the liquidator is appointed; and

(b)

in the case of a company that was put into liquidation by the court, the period of 6 months before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date on which, and at the time at which, the order of the court was made; and

(c)

if—

(i)

an application was made to the court to put a company into liquidation; and

(ii)

after the making of the application to the court a liquidator was appointed under paragraph (a) or paragraph (b) of section 241(2),—

the period of 6 months before the making of the application to the court together with the period commencing on the date of the making of that application and ending on the date and at the time of the commencement of the liquidation.

Compare: 1955 No 63 s 309; 1980 No 43 s 24(1); 1982 No 152 s 18

Section 292 heading: replaced, on 1 November 2007, by section 27(1) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(1): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(2): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(3): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(4): replaced, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(4): amended, on 31 August 2012, by section 7 of the Companies Amendment Act (No 2) 2012 (2012 No 60).

Section 292(4A): inserted, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(4B): inserted, on 1 November 2007, by section 27(2) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(5): amended, on 1 November 2007, by section 27(3) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(5)(a): replaced, on 26 April 1999, by section 8(1) of the Companies Amendment Act 1999 (1999 No 19).

Section 292(5)(b): amended, on 26 April 1999, by section 8(2)(a) of the Companies Amendment Act 1999 (1999 No 19).

Section 292(5)(b): amended, on 3 June 1998, by section 12(1) of the Companies Amendment Act 1998 (1998 No 31).

Section 292(5)(c): inserted, on 3 June 1998, by section 12(1) of the Companies Amendment Act 1998 (1998 No 31).

Section 292(5)(c): amended, on 26 April 1999, by section 8(2)(b) of the Companies Amendment Act 1999 (1999 No 19).

Section 292(6): amended, on 1 November 2007, by section 27(4) of the Companies Amendment Act 2006 (2006 No 56).

Section 292(6)(a): replaced, on 26 April 1999, by section 8(3) of the Companies Amendment Act 1999 (1999 No 19).

Section 292(6)(b): amended, on 26 April 1999, by section 8(4)(a) of the Companies Amendment Act 1999 (1999 No 19).

Section 292(6)(b): amended, on 3 June 1998, by section 12(2) of the Companies Amendment Act 1998 (1998 No 31).

Section 292(6)(c): inserted, on 3 June 1998, by section 12(2) of the Companies Amendment Act 1998 (1998 No 31).

Section 292(6)(c): amended, on 26 April 1999, by section 8(4)(b) of the Companies Amendment Act 1999 (1999 No 19).