THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

PART 5.6 - WINDING UP GENERALLY

Division 6 - Proof and ranking of claims

Subdivision A - Admission to proof of debts and claims

SECTION 553C   INSOLVENT COMPANIES - MUTUAL CREDIT AND SET-OFF  

553C(1)  [Company insolvent]  

Subject to subsection (2), where there have been mutual credits, mutual debts or other mutual dealings between an insolvent company that is being wound up and a person who wants to have a debt or claim admitted against the company:

(a)  an account is to be taken of what is due from the one party to the other in respect of those mutual dealings; and

(b)  the sum due from the one party is to be set off against any sum due from the other party; and

(c)  only the balance of the account is admissible to proof against the company, or is payable to the company, as the case may be.

553C(2)  [No set-off where knowledge that company insolvent]  

A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the company, or at the time of receiving credit from the company, the person had notice of the fact that the company was insolvent.