Commentary

10.5 Extortionate credit transactions

COMPANIES vol 10(2) borrowing and debentures
| Commentary

10.5 Extortionate credit transactions

| Commentary

10.5 Extortionate credit transactions

A transaction is extortionate if, having regard to the risk accepted by the person providing the credit:

  1. 10.5.1

        the terms of it are or were such as to require grossly exorbitant payments to be made (whether unconditionally or in certain contingencies) in respect of the provision of the credit; or

  2. 10.5.2

        it otherwise grossly contravened ordinary principles of fair dealing1.

The transaction is impeachable if entered into in the period of three years prior to the date of entry into administration or liquidation2.

If the transaction is impeachable, the court’s powers are

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