ASIC orders about creditor-defeating dispositions

This is Information Sheet 261 (INFO 261). It describes how liquidators can request ASIC to make an order to recover a voidable creditor-defeating disposition and how ASIC assesses those requests.

A ‘creditor-defeating disposition’ is a disposal of company property that prevents, hinders or significantly delays that property from becoming available for the benefit of creditors in the winding up of the company. For the complete definition, see section 588FDB(1) of the Corporations Act 2001 (Corporations Act).

ASIC or a court may undo the effect of this disposition if it is considered a ‘voidable transaction’ under the Corporations Act: see section 588FE(6B).

A liquidator may seek to recover a voidable creditor-defeating disposition by:

applying to a court for orders to void the disposition, or
asking ASIC to make an order undoing the effect of the disposition.

ASIC’s power to make orders about creditor-defeating dispositions

ASIC can make orders undoing the effect of a voidable creditor-defeating disposition by a company that has had a liquidator appointed and is being wound up: see section 588FGAA of the Corporations Act. We may exercise this power on our own initiative or at the request of the company’s liquidator.

We can make one or more of the following orders against the person who received the property:

An order directing the person to transfer to the company the property that was the subject of the disposition.
An order requiring the person to pay to the company an amount that, in our opinion, fairly represents some or all of the benefits that the person received (directly or indirectly) from the disposition.
An order requiring the person to transfer property to the company that, in our opinion, fairly represents the application of proceeds of the property that was the subject of the disposition.

Limits on ASIC’s power to make orders

We cannot make an order when the disposition was entered into or done:

before 18 February 2020
as part of a safe harbour restructure
under a compromise or arrangement approved by a court under section 411 of the Corporations Act
under a deed of company arrangement (DOCA) or by an administrator of the company
by a restructuring practitioner for the company or under a restructuring plan made by the company, or
by a liquidator or provisional liquidator.

We must not make an order if we have reason to believe that, if ASIC were a court, section 588FG would prevent us from making an order under section 588FF. This means that we must not make an order if we have reason to believe that it would:

materially prejudice a right or interest of a person (other than a party to the disposition) who:
- received no benefit because of the disposition, or
- received the benefit in good faith and at the time had no reasonable grounds to suspect (nor would a reasonable person in the circumstances) that the company was insolvent, or would become insolvent as a result of the disposition
materially prejudice a right or interest of a person who:
- became a party to the disposition in good faith and, at the time, had no reasonable grounds to suspect (nor would a reasonable person in the circumstances) that the company was insolvent, or would become insolvent as a result of the disposition, and
- provided valuable consideration under the disposition or has changed their position in reliance on the disposition
materially prejudice a right or interest of a person (other than a party to the disposition) if it is proved that the person later acquired the property in good faith.

How ASIC assesses requests for orders

When assessing a request for orders about a creditor-defeating disposition, we consider the following matters.

Does section 588FGAA apply?

Section 588FGAA of the Corporations Act applies in the circumstances set out in Table 1. All the criteria must be met for section 588FGAA to apply.

Table 1: When ASIC has the power to make an order under section 588FGAA

Circumstances	Criteria
1. A company in liquidation has made a creditor-defeating disposition of property under section 588FDB	A disposition of property of a company is a creditor-defeating disposition if: the consideration payable to the company is less than both the market value of the property and the best price reasonably obtainable in the circumstances at the time the relevant agreement (as defined in section 9 of the Corporations Act) relating to the disposition was made or, if there was no such agreement, at the time of the disposition it prevents, hinders or significantly delays the property from becoming available for the benefit of creditors in the winding-up.
2. The disposition of the property is a voidable disposition under section 588FE(6B)	A creditor-defeating disposition is a voidable disposition if at least one of the following applies: It was entered into, or an act giving effect to it was done: during the 12 months ending on the relation-back day, or between that day and on or before the winding up began when the company was insolvent or the company became insolvent because of the disposition or act. Note: The ‘relation-back day’ is defined in section 91. The company enters external administration within 12 months after the disposition (or an act giving effect to it) as a direct or indirect result of the disposition or act. However, it will not be a voidable disposition if it was made by an administrator, restructuring practitioner or liquidator (including a provisional liquidator) of the company, or under a DOCA, restructuring plan or by way of a compromise or arrangement approved by a court under section 411. Note: ASIC cannot make an order when the disposition was entered into or done as part of a safe harbour restructure: see section 588FG(8).
3. A person has received money or property as a result of the disposition (see section 588FGAA(1)(c))	A person has received money or property as a direct or indirect result of: the disposition, or the person’s acquisition of the property after the disposition.

Circumstances

Criteria

1. A company in liquidation has made a creditor-defeating disposition of property under section 588FDB

A disposition of property of a company is a creditor-defeating disposition if:

the consideration payable to the company is less than both the market value of the property and the best price reasonably obtainable in the circumstances at the time the relevant agreement (as defined in section 9 of the Corporations Act) relating to the disposition was made or, if there was no such agreement, at the time of the disposition
it prevents, hinders or significantly delays the property from becoming available for the benefit of creditors in the winding-up.

2. The disposition of the property is a voidable disposition under section 588FE(6B)

A creditor-defeating disposition is a voidable disposition if at least one of the following applies:

It was entered into, or an act giving effect to it was done:
- during the 12 months ending on the relation-back day, or between that day and on or before the winding up began
- when the company was insolvent or the company became insolvent because of the disposition or act.

Note: The ‘relation-back day’ is defined in section 91.

The company enters external administration within 12 months after the disposition (or an act giving effect to it) as a direct or indirect result of the disposition or act.

However, it will not be a voidable disposition if it was made by an administrator, restructuring practitioner or liquidator (including a provisional liquidator) of the company, or under a DOCA, restructuring plan or by way of a compromise or arrangement approved by a court under section 411.

Note: ASIC cannot make an order when the disposition was entered into or done as part of a safe harbour restructure: see section 588FG(8).

3. A person has received money or property as a result of the disposition (see section 588FGAA(1)(c))

A person has received money or property as a direct or indirect result of:

the disposition, or
the person’s acquisition of the property after the disposition.

Were the disposition and request made in the relevant time period?

The provisions about creditor-defeating dispositions commenced on 18 February 2020. They only apply to dispositions made on, or after, that date.

The liquidator may only ask ASIC to make an order during the period between the relation-back day and the later of:

3 years after the relation-back day, or
12 months after the first appointment of a liquidator to wind up the company.

What are the circumstances of the disposition and other relevant matters?

If we determine that section 588FGAA applies and the disposition and request were made within the relevant time period, we must then consider:

the conduct of the company and its officers
the conduct of the person
the circumstances, nature and terms of the disposition
the relationship (if any) between the company and the person
any other matter we consider relevant.

In addition, we may consider on a case-by-case basis:

the circumstances that led to the disposition
the time that has elapsed between the disposition of the property and when the liquidator asked ASIC to make an order
whether the person and the property are readily traceable and identifiable
the conduct of officers of a company, including whether that conduct indicates any suspected or alleged contraventions of the Corporations Act in relation to the disposition
the likelihood that an order will lead to a change in the person’s conduct or that the business community is generally deterred from similar conduct
mitigating factors relevant to the person who is suspected of making the disposition or the person against whom the order is proposed to be made
whether the liquidator has sought funding from creditors or third parties to pursue recovery of assets and, if so, details of those interactions, and
the expected return to creditors if an order is made and if an order is not made.

Has the liquidator included all relevant information in the request?

A liquidator should provide all relevant supporting information and documents when requesting ASIC to make orders undoing the effect of a creditor-defeating disposition.

The information and documents supporting the request need to be sufficiently detailed to enable ASIC to assess the matter, including whether section 588FGAA applies to the disposition. We have provided more information about what to include when preparing a request and obtaining books and supporting documents below.

Preparing a request and supporting documents

If you are a liquidator requesting ASIC make an order, you must provide as much information and material as possible to satisfy us that the disposition meets the definition of a voidable creditor-defeating disposition.

The request and supporting documents should:

identify that the property disposed of is property of the company
identify that the person against whom the order is sought is the recipient of the company property disposed of and, where appropriate, that the property is in their possession
determine the value of the property at the time of the disposition
explain why you consider the disposition to be a creditor-defeating disposition
establish that the disposition of property is voidable
identify any other matters that ASIC should consider when deciding whether the disposition is a creditor-defeating disposition, and
confirm that you are not aware of any factors that would prevent ASIC from making the order(s) sought.

The conduct of the company and its officers, and the person against whom an order is sought, are relevant considerations for ASIC when deciding to make orders. You should consider including evidence about the actions taken to obtain information and material to support the request.

The most credible and useful sources of evidence will generally be the books and records that a company is required to keep under the Corporations Act.

Before submitting a request for ASIC to make an order undoing the effect of a creditor-defeating disposition, you should consider whether you have utilised all options to obtain company books and have sufficient evidence to support the request.

If you need help acquiring company books and gathering sufficient evidence, consider:

requesting ASIC’s assistance to obtain company books
applying for funding from the Assetless Administration Fund, or
arranging a meeting with ASIC to discuss the proposed request.

Request assistance for external administration

If you do not have sufficient information – for example, because you do not have access to the company’s books and records – you may consider applying for external administration assistance from ASIC.

For information about how to apply for external administration assistance from ASIC if the books and records have not been provided, see Request assistance for external administration: Report on company activities and property, books and records.

Apply for funding from the Assetless Administration Fund

In certain circumstances, liquidators may consider applying for funding from the Assetless Administration Fund (AA Fund) to conduct investigations, such as public examinations. This may help you obtain evidence of misconduct or assist in asset recoveries. Funding may be available if:

you suspect a creditor-defeating disposition has occurred and have insufficient evidence to substantiate the claim(s) made in the request, and
the company in liquidation meets the eligibility criteria set out in the relevant grant guidelines including, but not limited to, the company in liquidation is an ‘assetless’ administration. In this context, ‘assetless’ has the meaning given in relevant AA Fund grant guidelines on the GrantConnect website.

Applications made under the AA Fund make it possible for liquidators to investigate and report to ASIC about offences, or undertake activities to help recover assets where misconduct is suspected. We will assess applications on their merit and in accordance with the published grant guidelines for those types of funding.

If you wish to request funding from the AA Fund, you can apply through the ASIC Regulatory Portal:

Apply to the Court for orders relating to creditor-defeating dispositions – Submit an AA Fund asset recovery application.
Investigate and lodge a supplementary report about director misconduct, including offences relating to creditor-defeating dispositions and whether the requirements of ASIC making an order have been met – Submit an AA Fund other matters application.

Meet with ASIC before submitting a request

You should consider whether you wish to meet with us before submitting your request for ASIC to make an order undoing the effect of a creditor-defeating disposition.

While we may be able to provide general guidance on the proposed request, clarify questions about publicly available information issued by ASIC, and discuss the types of evidence that may be relevant to support the request, we will not provide:

advice on how to complete the request or whether your evidence will satisfy the requirements for an order to be made, or
any indication about the prospects of success of the request if submitted.

For more information about arranging a meeting or to book an appointment, see Registered liquidator inquiries and assistance.

Please note, this service is only available to registered liquidators. You must make the booking and attend the appointment. Firm staff can accompany you to the appointment.

ASIC relies only on the information the liquidator provides in their request when assessing an order. We will not use our information-gathering powers to fill evidentiary gaps in the request or search ASIC records for information provided in other lodgements that might be relevant to the request. It will take longer for us to consider the request if we have to ask for more supporting information and evidence.

Submitting a request and supporting documents

Follow these steps to request ASIC to make orders undoing the effect of a voidable creditor-defeating disposition.

Complete the form

Download a copy of the request form (Word 139 KB)

Gather supporting information and documents

Include documents that may already be lodged with ASIC for another purpose. The information and documents in the request should have sufficient detail to enable ASIC to assess the matter, including whether section 588FGAA applies to the disposition.

Submit the request form and supporting documents

Email the form and documents to ASIC.CDD.requests@asic.gov.au.

Note: The above email address only receives requests and is not monitored for general queries or requests for technical advice.

You must submit a separate request form for each creditor-defeating disposition that you believe has occurred.

If you submit more than one request, each request must be self-contained and include sufficient information for ASIC to decide whether an order should be made undoing the effect of the creditor-defeating disposition.

What ASIC must disclose when determining whether to make an order

We must afford procedural fairness to a person directly or materially adversely affected by a decision to make an order. In this context, this means that we will give the person an opportunity to be heard. This will generally include access to the documents that we rely on when making the decision.

It will usually be necessary to disclose the liquidator’s request and supporting documentation. We may also seek additional documents from the liquidator relating to potential defences available.

We will give access to affected parties on the condition that the information only be used to prepare submissions or for a hearing regarding our decision. We may also give access to a third party. If we do, we will impose a condition that those documents cannot be copied or disclosed without our written consent.

Notification of ASIC’s decision and next steps

If we make an order undoing the effect of a creditor-defeating disposition, we will give a copy of the order and written reasons to the person against whom the order was sought. A copy of the order and written reasons will be given to the liquidator who submitted the request.

If we decide not to make an order, we will notify the liquidator who submitted the request and in some cases the person against whom an order was sought.

Appealing an order

The person against whom we make an order undoing the effect of a creditor-defeating disposition may apply to the Administrative Review Tribunal to review our decision. That person must apply within 28 days after receiving the order and written reasons for the order.

Alternatively, the person subject to an order, or any other person interested in the order, may apply to a Court within 60 days after the applicant was given, or otherwise became aware of, the order to have the order set aside: see section 588FGAE. The Court may set aside the order if satisfied that section 588FGAA did not apply based on the written reasons for the order.

Enforcing an ASIC order

Liquidators may consider applying for funding from the AA Fund to help enforce an ASIC order. We will assess applications on their merit and in accordance with the published grant guidelines.

An amount payable to the company under an ASIC order is recoverable by the company as a debt by action against the person in a court of competent jurisdiction: see section 588FGAD(1).

A person who engages in conduct that contravenes an order made under section 588FGAA(3) of the Corporations Act commits an offence: see section 588FGAC.

If a court convicts a person for engaging in conduct that contravenes an order for the payment of money, the court may (in addition to imposing a penalty on the person who committed the offence) order the person to pay the company an amount not exceeding the amount involved in the contravention: see section 588FGAD(2).

Where can I get more information?

For details about ASIC’s decision-making and confidentiality, see:

Information Sheet 9 ASIC decisions: Your rights (INFO 9)

Regulatory Guide 103 Confidentiality and release of information (RG 103)

Important notice

Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. We encourage you to seek your own professional advice to find out how the applicable laws apply to you, as it is your responsibility to determine your obligations.

You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your particular circumstances must be taken into account when determining how the law applies to you.

Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.

This information sheet was issued in October 2026.