Section 95A of the Corporations Act changed the pre-existing law as stated in Sandell v Porter: it is no longer necessary to determine whether a company can pay its debts 'from its own monies'. The court may take into account unsecured borrowings and voluntary financial support from third parties as resources available to the company, provided they are established as a matter of commercial reality. In cases of retrospective insolvency, the court can look at what actually happened — including that debts were in fact paid with third-party funds — rather than artificially excluding such arrangements. In cases of prospective insolvency, greater scepticism applies and the availability of third-party support must be cogently demonstrated.
The full text is available to signed-in members, including the 80 later cases that cite this judgment.
13 of the 80 citing cases carry a classified treatment. How each court treated it is available to signed-in members.