BL - Corp. & Dir. - Preference

Question 1

Preference
Is there a presumption in Preference that the creditor was preferred?

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Answer 1

No - unless connected in which case there is a rebuttable presumption that the creditor was preferred.

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Question 2

Preference
Who can claim preference?

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Answer 2

• a liquidator, or administrator 💦

Question 3

Preference
What is required for preference?

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Answer 3

• a person is a creditor of the company
• the company puts the creditor in a better position than they otherwise would have been
• proved the company was insolvent at the time of the transaction or became so as a result of it, and
• proved the company was influenced by a desire to prefer the creditor (subjective test)

Question 4

Preference
What is the relevant time for preference?

Answer 4

• 6 months preceding the onset of insolvency
• 2 years if connected person or associate (includes settling a debt that is guaranteed by a director)

Question 5

Preference
What are the sanctions for preference?

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Answer 5

The court has discretion to make an order to restore the position as if the company had not given preference.