Stay in touch with how the law affects you! Subscribe to our
Tired of unpredictable fees from ad hoc legal services?
Late shelf order applications will be refused
Insolvency Law News | April 2015
Liquidators seeking to unwind past transactions must apply for an extension of time within three years
Liquidators are able to unwind "voidable transactions" (as defined in s. 588FE of Corporations Act) which have been entered into within the prescribed time frames prior to the commencement of a winding up of a company: s.588FF of the Corporations Act. Many of our clients seek advice on how to pursue or how to defend these claims by liquidators once a company has been wound up. Where a liquidator needs more time to pursue a claim, they can apply to the court for a "shelf order" to extend the prescribed time frame.
In the case of Fortress Credit Corporation (Australia) II Pty Limited & Anor v Fletcher & Ors [2015] HCA 10 the High Court has provided some guidance on when and how an application for a shelf order must be made to extend the time frames within which the liquidator can pursue claims against creditors and related parties.
In this case the liquidators sought to "claw back" or "unwind" transactions that were not actually identified, but were "a blanket" bundle of transactions which the liquidators were intending to pursue against creditors. The prescribed time within which the liquidators could have taken action is 3 years under the Act, but the liquidators made the application after the initial 3-year period had expired. The court ruled that whilst there is no requirement when applying for a "shelf order" to identify any actual parties to the transactions being pursued, the court would not allow any extension of time as this application for the shelf order was not made within the prescribed time of 3 years.
Therefore, if you receive a claim from a liquidator or you are considering liquidation you may wish to contact us at Forum Law Solicitors to discuss the time frames of transaction and claims prescribed under the Act and your rights and obligations.
