CORPORATIONS ACT 2001

CHAPTER 5 - EXTERNAL ADMINISTRATION  

PART 5.7B - RECOVERING PROPERTY OR COMPENSATION FOR THE BENEFIT OF CREDITORS OF INSOLVENT COMPANY  

Division 2 - Voidable transactions  

SECTION 588FD   UNFAIR LOANS TO A COMPANY  

588FD(1)   [ What is unfair loan]  

A loan to a company is unfair if, and only if:


(a) the interest on the loan was extortionate when the loan was made, or has since become extortionate because of a variation; or


(b) the charges in relation to the loan were extortionate when the loan was made, or have since become extortionate because of a variation;

even if the interest is, or the charges are, no longer extortionate.

588FD(2)   [ Relevant matters]  

In determining:


(a) whether interest on a loan was or became extortionate at a particular time as mentioned in paragraph (1)(a); or


(b) whether charges in relation to a loan were or became extortionate at a particular time as mentioned in paragraph (1)(b);

regard is to be had to the following matters as at that time:


(c) the risk to which the lender was exposed; and


(d) the value of any security in respect of the loan; and


(e) the term of the loan; and


(f) the schedule for payments of interest and charges and for repayments of principal; and


(g) the amount of the loan; and


(h) any other relevant matter.


 

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