Gunning for it: Peak Indebtedness in the spotlight

Articles Written by Pravin Aathreya (Partner), Paul Buitendag (Partner), Ben Bishop (Senior Associate)

In significant news for the insolvency industry, the High Court will hear the long-awaited Gunns Group preference claim appeal in Bryant & Ors v Badenoch Integrated Logging (A10/2022) on 18 October 2022. 

Johnson Winter & Slattery act for PwC, the appellant liquidators of the Gunns group, in the proceeding. 

Briefly stated, the grounds for the appeal are:

  1. whether the Full Court incorrectly concluded that the peak indebtedness rule is not available to a liquidator in establishing an unfair preference under s 588FA(1) of the Corporations Act; and
  2. whether the Full Court incorrectly set aside the primary judge’s finding that certain payments were not part of a continuing business relationship by disapproving of the “predominant purpose” test stated in Sutherland v Eurolinx[1] (i.e. that there will be no continuing business relationship where the predominant purpose of a payment is recovering past indebtedness).

Material filed by the parties in the Proceeding to date can be viewed here.  

Our previous articles on the insolvency trialthe trialthe appealthe special leave application, and the grant of special leave can be accessed at the relevant links.

[1] Sutherland v Eurolinx Pty Ltd (2001) 37 ACSR 477 at 504 [148]

Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Liability limited by a scheme approved under Professional Standards Legislation (Australia-wide except in Tasmania).

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