Legal news
On 6 March 2025, Associate Justice Barrett handed down his decision in the matter of Duke Ventures Wellington Street Pty Ltd [2025] VSC 75. In this case, the Court clarified when a debtor can rely on an offsetting claim to set aside a statutory demand in a dispute adjudicated under the Building and Construction Industry Security of Payment Act 2002 (Vic) (SOPA).
#insolvency #statuory_demand #creditors #securityforpayments
The matter of Ford Kinter & Associates Pty Ltd v Reliance Franchise Partners Pty Ltd (in liq) [2025] FCA 139 emphasises the important role that creditors can play in facilitating asset recovery during insolvency proceedings. It further examines the broad discretionary powers the courts have under section 564 of the Corporations Act 2001 (Cth) (the Act), which enables courts to reward creditors who take on the financial risks of litigation to be prioritised when recovering company property or expenses in a winding up due to the risk assumed by them. In doing so, the court considers the public interest in encouraging creditors to provide indemnities so as to enable assets to be recovered.
#insolvency #liquidation #creditors #publicinterest
In certain circumstances creditors can take direct action against directors of companies in liquidation to recover insolvent trading losses suffered.
The process for doing so is to first try and obtain the liquidator’s consent and if they are not forthcoming, then take the steps required under subsections 588S and 588T of the Act.
The most common basis upon which creditors make an application to wind up a company and appoint liquidators is upon the non-compliance with a Creditor’s Statutory Demand. If the debtor company ignores the Creditor’s Statutory Demand and no payment or compromise is reached then the company is presumed insolvent, paving the way to wind up the company.
This article contains an explanation of the steps required when lodging an application for winding up in these circumstances, as well as some helpful tips to navigate the process effectively.
