CASE LAW ALERT: UNFAIR PREFERENCE CLAIMS AND THE SET-OFF “DEFENCE” UNDER SECTION 553C (PART 1 of 2)
The Section
Section 553C of the Corporations Act 2001 (Cth) (the “Act”) provides for a statutory set-off between an insolvent company and a party seeking to have a debt or claim admitted in the winding up. Provided that the creditor did not have notice of the company’s insolvency at the relevant time, the section is enlivened where there have been ‘mutual credits, mutual debts or other mutual dealings’ between the parties and allows for an account and set-off of sums due between them in respect of those mutual dealings, with only the balance of that account being admissible to proof against the company or payable to the company as the …
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