resource centre


voidables case studies

Preparing expert solvency or insolvency reports

The Situation

SV Voidables were engaged to draft and settle an expert insolvency report in respect of a liquidation containing more than 50 unfair preference actions.

The key issue we faced was that the company’s financials could not be used, as they were prepared for the entire group of companies, including various trusts and partnerships.

The Solution

Our team proved insolvency by:

  1. Assessing and adjusting the company’s internal management accounts (including reviewing 524’s published by the Receivers and Managers) to determine working capital positions throughout the relation back period, as well as many years earlier;
  2. Reviewing the company’s relationship with its main financier;
  3. Assessing whether the company had access to alternative funding/equity from related and unrelated sources;
  4. Creating a matrix of creditor demands, formal creditor demands, solicitor letters and stop credit/supply notices throughout the one year period prior to our appointment and analysing same to compare with cash inflows/outflows over the same time period; and
  5. Assessing each of the indicators of insolvency enunciated in ASIC v Plymin, Elliott & Harrison (2003) VSC 123 (including looking at the poor history of payment of statutory liabilities owing to the ATO and the OSR’s for QLD, WA, NT and NSW).

The Outcome

Despite the company’s clear breach of section 286 of the Corporations Act 2001 (Cth), we managed to prepare an expert insolvency report, which proved insolvency from 2 years prior to the Liquidators appointment.

Liaising with lawyers to recover large unfair preferences

The Situation

On 20 June 2012 A Fee Nix Pty Ltd (the company) sold its business to a newly formed related entity (called A Fee Nix (Aust) Pty Ltd (the related entity)), having shared the same sole-director.

The sale included all of the company’s assets and the assumption by the related entity of approximately 80% of all the unsecured creditor liabilities (not including statutory liabilities).

On 30 June 2012 the company entered into Liquidation.

Between 1 August 2012 and 30 September 2012, the related entity paid out a portion of those unsecured creditor liabilities it had assumed, including more than $180,000 to Creditor A Pty Ltd, more than $160,000 to Creditor B Pty Ltd and more than $580,000 to Creditor C Pty Ltd.

Some important points:

  • The relation back period was 1 January 2012 to 30 June 2012;
  • The sale of business contract was dated as commencing on 20 June 2012; and
  • Potential recoveries from unfair preferences, not including a potential claim relating to the sale of business, was more than $1.3 million.

The Solution

SV Voidables was engaged to recover unfair preferences made to the Commissioner of Taxation, during which time we reviewed the above set of facts and formed the following views:

  • The sale of business contract was an unreasonable director-related transaction and uncommercial transaction;
  • The payments made to Creditor A, Creditor B and Creditor C, totalling more than $1 million, were recoverable as unfair preferential payments;
  • Although the payments were made by the related entity rather than the company, case law dictates that not only are third party payments recoverable, but that the company does not need to be privy to every step of the transaction; and
  • Although the payments (defined as the transaction) were made after our appointment and not within the relation back period, the giving of effect to the transaction was the entering into the sale of business contract (which occurred during the relation back period).

The Outcome

We commenced proceedings against each of the 3 trade creditors. We were successful on all 3 claims, as well as the ATO preference, and eventually collected more than $1.3 million for the Liquidation and its creditors.

Securing a big result on an old bankruptcy job

SV Voidables recently secured a big win on a 2007 Bankruptcy job, by recovering $250,000 from a transfer of real property at an undervalue of approximately $325,000.

We were engaged in April 2013, and with the help of a Barrister, filed proceedings, with the 6 year statutory time period fast approaching.

The detail of the claim is complicated, but essentially involved the transfer of three real properties, by way of a Supreme Court order, to the husband of the Bankrupt for no consideration. After filing in August 2013 and attending 3 directions hearings and numerous exchanges with the other side (and throw in a 10 month delay due to the Judge being away) a final pre-trial meeting was held this year.

Despite the defendant rejecting a $200,000 offer 9 months ago, SV Voidables secured a $250,000 settlement for the bankruptcy Trustee and potentially a dividend of 30 cents in the dollar to unsecured creditors of the bankrupt.

The Solution

Following an 8 hour settlement conference, the Defendant conceded he was facing a potential judgement of more than $400,000 (including judgement costs) and so settled. 

Investigating interesting matters

Brief Facts

A few weeks prior to the Liquidators appointment, the company’s restaurant business was sold to an unrelated third party for more than $280k (being for market value).

The sale arose by way of a sale deed, however, interestingly, the company (being the true owner of the business) was not listed as the vendor. Rather, the director and her husband were.

SV Voidables was engaged to recover an ATO preference, and ended up stumbling across the above issues.

Our investigations revealed that funds totalling more than $200,000 were paid to the director’s husband and her husband’s brother, rather than being paid to the company and its creditors.

The Solution

Upon commencing action (with a couple of spare weeks before the limitation period expired), and engaging lawyers, we managed to negotiate a favourable settlement, in which priority and unsecured creditors will finally receive a dividend.


SV Voidables specialises in difficult voidable recovery matters and can help you by:

  1. identifying any and all possible claims that you may have;
  2. formulating and executing a recovery strategy; and
  3. with the assistance of your lawyers, negotiating a commercial settlement for all stakeholders.
Unfair preference claim against the Office of State Revenue (OSR)

The Situation

SV Voidables was asked to draft an expert insolvency report and investigate potential unfair preference claims against the Office of State Revenue (OSR) and various other creditors. Our investigations identified preference claims totalling more than $275,000.

The Solution

We were set 1 week to complete the insolvency report and draft demand letters on the 2 other creditors. We engaged immediately with the OSR by phone, set out our position clearly and stressed its urgency.

Over the week, we completed the following tasks:

  • On the Friday, being 5 days in, we completed the insolvency report;
  • On the Friday and Saturday, we spoke to the OSR to try and negotiate a settlement;
  • On the Sunday, being 7 days in, we finalised and settled the 2 demand letters; and
  • On the Monday, being 8 days in, we settled with the OSR.

The Outcome

Our Voidable Recovery experts specialise in formulating novel strategies to recover voidable transactions. We settled the OSR claim in under 8 days, and the recovery of the other claims remains ongoing (in court).


For more information on our Voidables services, please visit our Voidables experience page.


Contact our Voidables team

If you have any questions relating to our Voidables services, please contact one of our expert advisors.


Related Articles

Time period for unfair preference payments to unrelated creditors


Voidable recoveries - negotiating commercial settlements


Administration and liquidation: when is an individual deemed to be an employee or contractor?


Case update: cross-border insolvency law


Secured creditors, unfair preferences and Liquidators

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