Full Federal Court decision confirms creditors can be impending

Focus: Windoval Pty Limited (Trustee) v Donnelly (Trustee), in the Matter of Donnelly (Trustee) [2014] FCAFC 127 Services: Financial services, Restructuring & insolvency Industry Focus: Financial services In April, we published an article on the decision in Donnelly (Trustee) v Windovel Pty Limited,1 which confirmed that the term "creditors" under section 121(1) of the Bankruptcy Act 1966 (Cth) encompasses "impending creditors". This decision was appealed to the Full Court of the Federal Court. The Full Court recently delivered its judgment dismissing the appeal. This article provides a short summary of the Full Court's decision.

Background

To recap, proceedings were brought by the bankruptcy trustee of Mr Bonnell (Bankrupt) under section 121 of the Bankruptcy Act 1966 (Cth) (Act) claiming that a transfer of funds (made nine years prior to bankruptcy) by the Bankrupt to his family trust in the amount of five million dollars was void against the bankruptcy trustee as it was made with the intention to put the...