Federal Court rejects good faith defence to unfair preference claims

Michelle Dean, Andrew Johnson, Bentley Anderson and Riley Lenard of Corrs summarise a recent decision confirming that institutional creditors face a high evidentiary burden to establish the section 588FG(2) good faith defence to unfair preference claims, with the Court rejecting the QRO’s defence and underscoring the need for direct evidence of contemporaneous state of mind from all relevant decision-makers, particularly where insolvency red flags such as phoenix activity are present.

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