Uncommercial transactions

What it covers

A transaction a reasonable person in the company's circumstances would not have entered into, weighing what the company gained and lost against what the other parties gained. A creditor doesn't need to be involved. It is voidable if it was also an insolvent transaction inside the window.

"…it may be expected that a reasonable person in the company's circumstances would not have entered into the transaction…"s588FB(1)

1. 1A reasonable person would not have entered into it

   Judged by the benefits to the company, the detriment to the company, the benefits to the other parties, and any other relevant matter.

   s588FB(1)(a)–(d)
2. 2It doesn't need a creditor

   It can be uncommercial whether or not a creditor is a party, and even if a court order or agency direction required it.

   s588FB(2)
3. 3It was an insolvent transaction

   The company was insolvent at the time, or became insolvent because of it.

   s588FC
4. 4It falls inside the window

   The 2 years ending on the relation-back day. 4 years if a related entity is a party, 10 years if the purpose was to defeat creditors.

   s588FE(3), (4), (5)

Defence

The good faith defence in s588FG(2) applies, as it does to unfair preferences.