Good Faith Defense for Voidable Transaction

Good Faith Defense for Voidable Transaction

This week, the Supreme Court has expanded the “good faith” defense for voidable transactions. This means that where a creditor “gave value” through the original transaction, that creditor can now defeat a voidable transaction claim by proving that it only acted in good faith, with no suspicion of insolvency.

We believe the benefit to the general pool of creditors of the clawback must be taken into consideration before voidable transaction claims are undertaken.

In the past, we have been critical of liquidators who have taken these actions for what appear to be the benefit of their own fee recovery.  Our approach has always been one that has placed more weight on the knowledge of insolvency and good faith clauses.

More information can be found on the Supreme Court Judicial Decisions page Case [2015] NZSC 7 – 18 February.