Payments made to creditors via letters of credit procured by a company may arguably constitute unfair preferences under s 588FA(1) of the Corporations Act 2001 (Cth), notwithstanding that the bank (not the company) directly pays the creditor, where the company procured the letters of credit and pre-funded payment. The question whether such arrangements constitute a 'transaction' to which the company and creditors are 'parties' is not suitable for summary determination and depends on the whole matrix of circumstances. Sheahan v Carrier Air Conditioning Pty Ltd is distinguishable where the company itself (rather than a receiver acting on behalf of a secured creditor) procured the payment mechanism.
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