Preferences in Liquidation


What are ‘ Preferences in Liquidations ‘ ?

Usually a ‘preference’ or ‘preferential payment’ is in the form of a payment, but almost any transfer of property and some creation of property (mortgages etc.)
The creditor must have received an advantage – have been preferred – over other creditors. This concept is described in the Act as the creditor receiving “more than the creditor would receive from the company in respect of the debt if the transaction were set aside and the creditor were to prove for the debt in a winding up of the company”.


Who are ‘ Preferences in Liquidations ‘ for/aimed at?

Creditors and Directors of a company that is currently in liquidation who may receive a claim for a preference from a Liquidator.


How does ‘ Preferences in Liquidations ‘ work? What’s the process?

To be able to recover an unfair preference, the liquidator must show that:

  1. A debtor creditor relationship existed;
  2. A transaction occurred;
  3. The timing of the transaction – must have occurred within 6 months of the relation back date (6 months non related parties, 4 years related parties);
  4. It occurred at a time when the company was insolvent;
  5. The transaction gave the creditor an advantage over other creditors (preferential treatment); and
  6. The creditor suspected or should have suspected that the company was insolvent


When will our Preferences in Liquidations Services be required?

When a client has been put on notice by a liquidator that they have potentially received a preference payment from one of their customers. When a client has a customer that is paying off their debts in instalments (rather than on invoice).
C&N Turnaround Solutions would assist the client to defend any preference claims brought against them.


What are the benefits/outcomes of using C&N Turnaround Solutions in Preference Claims in Liquidations?

Reduction or elimination of the amount required to be repaid by the client to a Liquidator by assisting the client to provide their defences to such a claim, or to engage an appropriately qualified Lawyer to defend them.



Contact us

Call 02 9299 7000 or click here to submit your enquiry



 With C&N Turnaround Solutions we can help you untangle the mess, clear a way forward and give you peace of mind…

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