ATO Garnishee Notices in Voluntary Administration

Michael Sloan and Richard Fisher AM of Ashurst highlight a NSW Supreme Court decision confirming that ATO garnishee notices create statutory charges over debts owed to companies in voluntary administration without constituting enforcement prohibited by section 440B of the Corporations Act, but that courts can use section 447A to prevent the ATO from benefiting from those charges where they would divert funds from the administration and undermine the interests of unsecured creditors, while suggesting similar relief may be available where a company enters into a DOCA and the garnishee notice was issued after the commencement of voluntary administration.

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