When a company enters liquidation, a liquidator is appointed to maximise the pool of assets available to repay creditors. To do this, they often review transactions made before liquidation and may seek to have some of them ‘set aside’ under the Corporations Act 2001 (Cth).
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One of the most disputed categories is the ‘unreasonable director-related transaction’. This covers transactions where the company provides a benefit to its directors (or their close associates) that cannot be commercially explained. Once a transaction is found to fall into this category, the liquidator has the legal power to pursue recovery avenues. This may result in personal liability for…