---
title: "Creditor’s response to a liquidator’s unfair preference claim, with defence and evidence checklist"
url: "https://ailawframework.com/precedents/insolvency-restructuring-and-bankruptcy/response-to-unfair-preference-claim"
type: "precedent"
site: "AI Law Framework"
id: "a8-response-to-unfair-preference-claim"
area_id: "A8"
kind: "letter"
ai_level: "yellow"
version: 1
task_ids: ["A8-T1-R6"]
law_stated_as_at: "2026-10-18"
---

# Creditor’s response to a liquidator’s unfair preference claim, with defence and evidence checklist

> A letter for a creditor responding to a liquidator’s demand to repay payments as unfair preferences: requests the liquidator’s evidence, puts the running account and good faith defences, and proposes a…

Canonical page: https://ailawframework.com/precedents/insolvency-restructuring-and-bankruptcy/response-to-unfair-preference-claim  
Law stated as at: 2026-10-18

Site index for agents: https://ailawframework.com/llms.txt

A letter for a creditor responding to a liquidator’s demand to repay payments as unfair preferences: requests the liquidator’s evidence, puts the running account and good faith defences, and proposes a without-prejudice resolution, with a checklist of the evidence the creditor needs.

## Key facts

- Kind: Letter. A letter or email you adapt and send.
- Practice area: [Insolvency, Restructuring & Bankruptcy](https://ailawframework.com/precedents/insolvency-restructuring-and-bankruptcy.md)
- Jurisdictions: Australia
- AI level: Yellow. AI can help in set ways. A lawyer checks specific points before use.
- Law stated as at: 2026-10-18
- Status: Maintained. Checked on 2026-10-18 against the 4 authorities it cites, for Australia.

## When to use it

Use for a supplier or other creditor that receives a liquidator’s letter claiming that payments received in the 6 months before the relation-back day must be repaid. Send it within the time the liquidator allows, after collecting the account history and the creditor’s knowledge of the company’s position.

## Used for these tasks

- [Build a voidable-transaction and preference issues table](https://ailawframework.com/practice/insolvency-restructuring-and-bankruptcy/build-a-voidable-transaction-and-preference-issues-table.md)

## How AI may be used

AI may rebuild the account history and run the running-account calculation from the ledger and invoices, and draft the letter, but a lawyer decides which defences to run and checks every factual statement about the creditor’s knowledge.

**AI may:**

- Build a transaction table of invoices, payments, credit terms and balances for the relation-back period from the creditor’s ledger
- Calculate the net reduction in indebtedness across the continuing business relationship, using the start point the lawyer chooses, showing each step
- List the documents and communications that bear on what the creditor knew about the company’s solvency, for the lawyer to review

**AI must not:**

- Must not state what the creditor knew or suspected about the company’s solvency; that comes from the creditor’s people and the documents, checked by the lawyer
- Must not prepare any affidavit or statement for a witness to sign
- Must not admit that the company was insolvent, that payments are preferences, or any amount, without the lawyer’s decision

**The lawyer checks:**

- The payments fall within the period in s 588FE and the liquidator has evidence of insolvency at each payment date
- The running-account start point and calculation are defensible on the account history, and any secured or retention-of-title position is considered (s 588FA(2))
- The good faith defence is supported by the creditor’s actual knowledge: overdue patterns, payment plans, stop-supply decisions, demands and industry information are all reviewed
- Any settlement offer is made without prejudice, accounts for the creditor’s right to prove under s 588FI, and the limitation date for any claim is diarised

## Authorities

- [Corporations Act 2001 (Cth) s 588FA(1) to (3) (meaning of unfair preference; secured debts; continuing business relationship or running account treated as a single transaction)](https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fa.html)
- [Corporations Act 2001 (Cth) s 588FE(2) (insolvent transaction voidable if entered into during the 6 months ending on the relation-back day, or after it and before the winding up began)](https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fe.html)
- [Corporations Act 2001 (Cth) s 588FG(2) (no order if the person became a party in good faith, had no reasonable grounds for suspecting insolvency, a reasonable person would have had none, and gave valuable consideration)](https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fg.html)
- [Corporations Act 2001 (Cth) s 588FI (a creditor who repays an unfair preference may prove for the preferred debt)](https://classic.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s588fi.html)

## Full text and drafting notes

The full text and the drafting notes are not part of this public page. Signed-in firm accounts can read them at https://ailawframework.com/precedents/insolvency-restructuring-and-bankruptcy/response-to-unfair-preference-claim and through the signed-in MCP connector https://ailawframework.com/mcp/firm.

*Practice guidance for planning and review. Confirm current primary sources and the requirements of the actual matter. This is general information, not legal advice.*