Preferential Payments Brisbane
Preferential Payments allow a creditor to have preference of payments or transfers of assets over other creditors to help secure against loss.
Preferential Payments, so what does this mean for your Business?
In certain instances, the liquidator may recover these payments or transfers which will be provided to the appropriate creditors to cover such losses.
Who may recover preferential payments. As mentioned above, the liquidator is the only person that can recover preferential payments.
However, to recover these payments it may require a Court Order to enable to process to be completed.
Before a Court orders a preferential payment, the following must be fulfilled:
- The creditor had reason to believe the company was insolvent;
- There was a transaction/it was entered into (payment of monies);
- The agreement and transaction as between the creditor and the company;
- This took place at the time of insolvency;
- It occurred within the statutory time period before the liquidation; and
- The transaction gave the creditor an advantage over other creditors.