Two recent Full Court of the Federal Court decisions have impacted the way in which preference claims are conducted referable to the application of the ‘peak indebtedness rule’, and the application of set-off under s. 553C of the Corporations Act 2001.

The Full Court of the Federal Court recently delivered its judgment in the matter of Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq) (receivers and managers appointed) [2021] FCAFC 64.

The decision will undoubtedly have significant implications for the ongoing application of the peak indebtedness rule by creditors and liquidators.  

Revenge of the Zombies is a 1943 horror film in which zombies exact revenge on their mad scientist creator.

Although there are not many mad scientists on the scene in 2020, there are many zombie companies which, if subject to liquidation, are likely to create an influx of preference claims being brought by liquidators and which will cause grief to credit managers in the coming months and years.

From 1 January 2021 new insolvency regimes will be introduced which will involve:

1. a new insolvency process for small businesses whereby financially distressed but viable companies can restructure their existing debts and continue to trade; and
2. a simplified liquidation process which will allow for faster and lower-cost liquidation.