Australia: Insolvency/Bankruptcy/Re-Structuring

Restructuring and distressed transactions in Australia are being influenced by a number of key trends. These include but are not limited to the broader economic downturn; sector-specific challenges; access to capital; regulatory challenges; sustainability considerations; investment in technology; increased M&A activity; and continuing interest from private equity investors.

Bankruptcy trustees can challenge pre-bankruptcy transactions under sections 120, 121, and 122 of the Bankruptcy Act 1966, targeting undervalued transfers, creditor-defeating arrangements, and preferential payments. Understanding the statutory tests, timing rules, and evidentiary requirements is essential for recipients facing clawback demands, as market value alone does not guarantee protection and poor documentation can prove decisive.

When a debtor appears to have no recoverable assets, creditors in Queensland still have several enforcement and insolvency strategies available. Understanding the difference between a debtor with genuinely no assets and one who may have hidden or future capacity to pay is crucial for determining whether debt recovery efforts are worthwhile.