(1) A transaction is an unfair preference given by a company to a creditor of
the company if, and only if:
- (a)
- the company and the creditor are parties to
the transaction (even if someone else is also a party); and
- (b)
- the transaction results in the creditor receiving from the company, in
respect of an unsecured debt that the company owes to the creditor, 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;
even if the transaction is entered into, is given effect to, or is required to
be given effect to, because of an order of an Australian court or a direction
by an agency.
(2) For the purposes of subsection (1), a secured debt is taken to be
unsecured to the extent of so much of it (if any) as is not reflected in the
value of the security.
(3) Where:
- (a)
- a transaction is, for commercial purposes, an integral part
of a continuing business relationship (for example, a running account) between
a company and a creditor of the company (including such a relationship to
which other persons are parties); and
- (b)
- in the course of the relationship, the level of the company's net
indebtedness to the creditor is increased and reduced from time to time as the
result of a series of transactions forming part of the relationship;
then:
- (c)
- subsection (1) applies in relation to all the transactions forming
part of the relationship as if they together constituted a single transaction;
and
- (d)
- the transaction referred to in paragraph (a) may only be taken to be
an unfair preference given by the company to the creditor if, because of
subsection (1) as applying because of paragraph (c) of this
subsection, the single transaction referred to in the last-mentioned paragraph
is taken to be such an unfair preference.
Commonwealth Numbered Acts