Changela v Dracoma Pty Ltd

1. [1]

   BELL CJ: This is an appeal from one aspect of a decision of Stevenson J (the primary judge) in the Commercial List of the Equity Division in Dracoma Pty Ltd v Changela [2025] NSWSC 83 (the primary judgment) concerning two payments of $250,000 (the impugned payments) made by Changela Exports Pty Limited (the Company) on 20 September 2017.

2. [2]

   These payments were found to constitute unreasonable director-related transactions for the purposes of s 588FDA of the Corporations Act 2001 (Cth) (the Act). Such payments are voidable transactions for the purposes of s 588FE of the Act and do not depend upon the company in question being insolvent at the time the payments were made.

3. [3]

   The proceedings were brought by Dracoma Pty Ltd (the Respondent) which, on 1 September 2022, entered into a Deed of Assignment with the then liquidator of the Company pursuant to s 477(2)(c) of the Act in respect of the rights, title and interest in any choses of action that the Company or the Liquidator had against, relevantly, any present or past director of the Company. The Respondent was a trade creditor of the Company.

4. [4]

   The proceedings extended to a series of payments made by the Company comprising some $1,702,000 and his Honour found that a number of these constituted unfair preferences for the purposes of s 588FA of the Act and/or unreasonable director-related transactions. As already noted, the two impugned payments with which this appeal is concerned were found to be unreasonable director-related transactions for the purposes of s 588FDA of the Act. Unlike the other payments the subject of the judgment, the impugned payments were not made at a time when the Company was insolvent and they did not result in the Company becoming insolvent.

5. [5]

   Before turning to the primary judge’s reasoning with respect to these two payments, it is necessary to provide a little detail in relation to the business of the Company.

Background

1. [6]

   The Company operated a business of exporting chickpeas from Australia to India. It was incorporated on 12 December 2012: PJ [15]. It had a relatively short-lived trading life, commencing trading by way of a transaction with the Respondent around September 2016, and ceasing trading in early 2018: PJ [16], [179]. The Company was placed into liquidation on 23 December 2020 and deregistered on 17 September 2021: PJ [19]. It was restored to the Register for the purposes of the Deed of Assignment and these proceedings.

2. [7]

   Mr Alex Wheeler is the sole director and shareholder of the Respondent. He has for the last 50 years grown ‘desi’ and ‘kabuli’ chickpeas on several farms in the Central West and Orana region of New South Wales: PJ [1]-[3]. In that region, chickpeas are harvested annually around November: PJ [4]. The Respondent typically either sells its crop to grain traders or stores part of it for sale later: PJ [5].

3. [8]

   Mr Wheeler’s first contact with Prashant Changela was in September 2016 and was facilitated by Dr Vijay Pandya, Mr Wheeler’s long term general medical practitioner but also, evidently, a business associate of Prashant Changela in relation to crop trading and exporting through the Company. Soon after their first meeting, the Company agreed to purchase the Respondent’s 2016 crop of chickpeas: PJ [139] (the 2016 Crop).

4. [9]

   The 2016 Crop was delivered between November 2016 and February 2017 and paid for in full by the Company on 12 April 2017 by way of three bank deposits totalling $1,523, 209.87: PJ [140].

5. [10]

   The Company had no facility from any bank or other lender, no formal governance or financial systems, no evidence of formal shareholders or directors’ meetings, and maintained its accounting records on an MYOB program “maintained on an ad hoc basis by Rajan [Changela] as and when he had time to do so”: PJ [31]-[33]. The directors and shareholders of the Company were Sweta and Radhika until 2019, when they were replaced by Grishkumar and Jayana, but none of those four individuals played any role in administering the Company’s affairs: PJ [17]-[18]. Prashant Changela admitted that he was a shadow director of the Company and Dr Pandya ultimately admitted, after over a day of cross examination, that he was as well. In this context, the primary judge held (at PJ [45]) that:

6. [11]

   Notwithstanding the paucity of formal records, the primary judge was able to conclude that “the impugned payments constituted repayment of funds earlier advanced to the Company”: PJ [26]. Thus, in relation to the two payments the subject of this appeal, his Honour noted that on 19 July 2017, $250,000 had been advanced to the Company by Prashant and Sweta Changela and $250, 000 had been advanced by Dr Pandya/Vijay Pandya Pty Limited (Dr Pandya’s company).

7. [12]

   The primary judge noted a dispute between the parties as to whether the funds advanced from time to time by members of the Changela family and Dr Pandya were loans or injections of equity in the form of cash. His Honour concluded that the advances were “loans repayable whenever Prashant, Rajan and Dr Pandya so determined”: PJ [116]. Some insight as to the Company’s modus operandi may be gleaned by an email sent from Prashant Changela to his brother Rajan and Dr Pandya on 5 June 2017:

8. [13]

   In an important piece of evidence, on 20 September 2017, Prashant sent an email to Dr Pandya, Komal Pandya and Rajan Changela as follows:

9. [14]

   In his reasons, the primary judge said (at PJ [224]) that:

10. [15]

    It was not in issue that the two impugned payments of $250,000, one to Prashant Changela and his wife Sweta, and one to Vijay Pandya Pty Ltd, did not leave the Company insolvent and it was accepted that the Company had no other trade creditors at the time the payments were made. It was also accepted that, at the time of the payments, the Company had not entered into any commitments in respect of the 2017 chickpea season, the harvest of which was still several months away. Indeed, it was not until October 2017 that Prashant Changela had discussions with Mr Wheeler in relation to his 2017 crop of chickpeas (the 2017 Crop).

11. [16]

    In an email of 21 July 2017, Prashant Changela had inquired of Ian Mallon of Mallon Commodity Broking as to current trading in the “Desi Chickpea New Crop”, noting that he “didn’t have interest just yet”. In an email to Dr Pandya on the same day, Prashant Changela wrote “Market gone real down real fast, can't believe, I still don't understand why? NSW is getting dryer and dryer...” to which Dr Pandya replied the following day:

12. [17]

    Ultimately, the Company agreed to purchase the entire 2017 Crop. There was a debate at trial as to whether this was a conventional contract for the sale of goods or whether the Company simply took the 2017 Crop on consignment. The primary judge held that the former characterisation was consistent with such documentary evidence as there was and there is no appeal from that finding. Relevantly for present purposes, however, his Honour found that the agreement was entered into in “late 2017” (PJ [141]) and noted (at PJ [169]) that “the Company’s General Ledger contains an entry dated 20 December 2017 in the amount of $1,809,362.55 described as being ‘Purchase; Alex Wheeler’.”

13. [18]

    The primary judge noted that:

14. [19]

    Vijay Pulses Pty Ltd ultimately made payments to the Company in the sum of $1,232,447.25.

Relevant legislation

1. [20]

   At the time the impugned payments were made, s 588FDA of the Act relevantly provided as follows:

2. [21]

   Unreasonable director-related transactions may be voidable depending on their proximity to the “relation-back day”: s 588FE (1) and (6A). There was no issue that the impugned payments were made before the “relation-back day”, which was 23 December 2020: PJ [221].

3. [22]

   Provided the court is satisfied that a company’s transaction is voidable, it may make a number of orders under s 588FF of the Act. Section 588FF relevantly provided:

4. [23]

   In Weaver v Harburn [2014] WASCA 227; 103 ACSR 416 at [91]–[92], McLure P noted, in a passage that has been regularly cited, that:

5. [24]

   More recently, in Aviation 3030 Pty Ltd (In Liq) v Lao [2022] FCA 458 at [402] (Aviation 3030), Anastassiou J posited that:

6. [25]

   His Honour also at [412] referred to “the fundamental purpose of the provision being ‘self-evidently an anti-avoidance provision aimed at preventing errant directors from stripping benefits out of companies to their own advantage’”, citing Vasudevan v Becon Constructions (Aust) Pty Ltd (2014) 41 VR 445; [2014] VSCA 14 at [19] (Vasudevan).

7. [26]

   The now favoured view (after some inconsistency of approach following the introduction of s 588FDA) is that a broad interpretation should be given to the expression “for the benefit of” in s 588FDA(1)(b) and that the benefit in question may be a direct or indirect benefit: Vasudevan at [19], [26]-[31]; see also Pleash (Liquidator), in the matter of SFG Relocations Pty Ltd v Fourie (No 3) [2024] FCA 583 at [64]-[65]; In the matter of Gondon Five Pty Ltd (in liq) [2020] NSWSC 1769 at [16]-[18] (Gondon); CEG Direct Securities Pty Ltd v Cooper as liquidator of Runton Investment and Development Pty Ltd (in liq) [2025] FCAFC 47 at [109] (CEG).

8. [27]

   The detriment to the company within the meaning of s 588FDA(1)(c)(ii) of entering into the transaction refers to commercial detriment but is not confined to detriment that can necessarily be measured in money terms: Shot One Pty Ltd (in liq) v Day [2017] VSC 741 at [211]; Aviation 3030 at [310]; In the matter of Sans Pareil Estate Pty Ltd (in liq) [2024] NSWSC 255 at [62] (Sans Pareil); see also Buzzle Operations Pty Ltd (In liq) v Apple Computer Australia Pty Ltd (2011) 81 NSWLR 47; [2011] NSWCA 109 at [117] (Buzzle Operations); Queensland Phosphate Pty Ltd v Paradise Phosphate Ltd [2019] VSCA 215 at [164(g)].

9. [28]

   It has also been held that the “assessment of “benefits” and “detriment” and any other relevant matter as part of the mandatory considerations required to reach a conclusion as to the negative stipulation in s 588FDA(1)(c) demands a sensible commercial assessment of the reality of the company’s circumstances and ought not be confined to analysing only the enforceable legal relationships as documented”: CEG at [161].

10. [29]

    In Crowe-Maxwell v Frost (2016) 91 NSWLR 414; [2016] NSWCA 46, this Court drew on authorities concerning “uncommercial transactions” under s 588FB of the Act to assist in identifying circumstances that may constitute unreasonable director-related transactions and Beazley P held at [89] that:

11. [30]

    In Smith v Starke, In The Matter of Action Paintball Games Pty Ltd (In Liq) (No 2) [2015] FCA 1119; (2015) 109 ACSR 145 at [112], Gleeson J gave the following examples of transactions have been found to be unreasonable director-related transactions within s 588FDA:

12. [31]

    To these may be added the following examples:

Primary judgment

1. [32]

   After noting that the test under s 588FDA of the Act is objective and requires consideration of the “totality of the business relationship between the parties, and to what the parties under their relationship intended to effect, and how their intention was effected, in part or in whole, by the impugned transaction”, citing Featherstone v Ashala Model Agency Pty Ltd (in liq) [2018] 3 Qd R 147; [2017] QCA 260 at [125] in turn citing Cussen v Sultan [2009] NSWSC 1114 at [23], and noting that, given the impugned payments were made to persons closely associated with the Company, careful scrutiny of the transactions is required, citing Woodgate v Fawcett [2008] NSWSC 868 at [105], the primary judge’s terse analysis was as follows:

2. [33]

   This conclusion and his Honour’s reasoning is challenged on appeal.

Arguments on appeal and consideration

1. [34]

   The focus of the appeal was on whether a reasonable person in the Company’s circumstances would not have made the impugned payments having regard to the considerations referred to in s 588FDA(1)(c) of the Act.

2. [35]

   The Appellants attacked a number of aspects of the primary judge’s reasoning and were critical of his Honour’s failure to take into account the Company’s traditional modus operandi as to its financing requirements.

3. [36]

   The following matters are relevant to a consideration of the Appellants’ sole ground of appeal:

4. [37]

   In respect of these matters, the first two were not in issue. The third followed from the second. The Respondent submitted that:

5. [38]

   The Respondent pointed to emails of 18 and 19 September 2017 between Prashant Changela and Dr Pandya about prospective sales of chickpeas into India and price volatility. The volume being contemplated for sale in these emails was 500 tonnes at a price around $975 to $980 per tonne. As noted in [36(viii)] above, the Company in fact had an injection of funds on 7 November 2017 apparently sufficient to meet this planned export, even without allowing for income from the on-sale. No negotiations had even opened up with Dracoma as at 20 September 2017 for the purchase of the 2017 Crop, let alone had terms been reached. The Respondent did not identify what the relevant “detriment” to the Company was of repaying funds and thus discharging a liability as opposed to retaining funds for the purposes of discharging a potential further liability to a third party, especially in circumstances where the lenders, having been repaid prior loans in early June 2017, had readvanced moneys to the Company on 19 July 2017 (see [11] above).

6. [39]

   The fourth matter noted at [36] above was self-evident on the face of the pleadings from which the admission was taken. The fifth matter was correct.

7. [40]

   The sixth matter is supported by the terms of the 20 September 2017 email, a reliable contemporaneous communication which explained the basis for the impugned payments, and which was consistent with the repayments which had taken place in early June 2017. Contrary to the Respondent’s submission, this email was strong evidence providing a commercial explanation for the impugned payments. Moreover, the payments were not gifts or distributions to the directors but were repayments of loans, repayable on demand. Given their character, the explanation for their repayment was obvious. Further, I would not, with respect, agree with the primary judge’s characterisation as “glib” of Prashant Changela’s explanation that the money repaid was “not required” by the Company at the time of the repayments. It was entirely accurate in commercial terms: the Company had no relevant debts and no binding future commitments. It was a small proprietary company, financed by loans from its directors and associates repayable on demand.

8. [41]

   The seventh and eighth matters can be taken together, and largely speak for themselves. In addition, apart from the likelihood of further advances by the directors from their own funds, the primary judge’s statement (at PJ [236]) that, “the only means that would be available for the Company to pay for the likely cost of purchase of the 2017 Crop would be the proceeds of its on-sale” (emphasis added) would not necessarily or self-evidently have been an adverse matter for the Company. This would depend on a number of matters that were not known at the time of repayment of the loans, namely the terms of any contract to be entered into with the Respondent including the timing of any payment obligation under it, and the terms of any on-sale contract with the ultimate purchaser of the goods in India.

9. [42]

   As to the ninth matter, namely the absence of any evidence that Prashant or Dr Pandya gave any consideration as to whether the payments would have a negative impact on creditors of the Company, as noted in [36], this was either irrelevant because it was a subjective consideration but, perhaps more significantly, had such consideration been given, it would have favoured the Appellants as the answer to any such consideration would have been “no” because there were no trade creditors at the time of the payments, and no ongoing operating expenses.

10. [43]

    As to the final matter, consistent with the primary judge’s findings as to the nature of the loans, this had the consequence that a liability of the Company was discharged by the impugned payments. This was not a case of discretionary payments or distributions of questionable merit being made to directors. The Respondent submitted that the primary judge did not in fact hold that the loans were repayable on demand but “[r]ather, his Honour found at [116] that the advances were loans repayable whenever Prashant, Rajan and Dr Pandya so determined”. The Respondent’s distinction is a semantic one. Its apparent subtlety eludes me.

11. [44]

    In CEG at [144], it was held that the standard of appellate review for challenges to a primary judge’s evaluation of the reasonableness of a director-related transaction under s 588FDA(1)(c) was the correctness standard whereby the appellate court determines for itself the correct outcome (while making due allowance for the advantages available to the trial judge): citing Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9.

12. [45]

    In my view, applying that standard, the appeal should succeed. In this context, the criticisms made by the Appellants of what was but one of many otherwise unchallenged aspects of his Honour’s decision were persuasive, and have informed my reconsideration of that part of his decision which is subject to challenge.

13. [46]

    The repayments were of a vastly different character to any of the examples set out in [30]-[31] above.

14. [47]

    Repayment of a loan neither due nor repayable on demand may amount to “stripping benefits out of companies to [the directors’] own advantage”: Vasudevan at [19]. So also, repayment of a loan in full when a company has other creditors whose payment is due or imminent may be problematic but that was not this case. In the circumstances of the present case, it is difficult to characterise the repayment of a loan repayable on demand with the pejorative label “stripping” employed by Nettle JA in Vasudevan when the effect of that repayment did not affect the Company’s balance sheet because the repayment did no more than discharge an obligation owing by the Company.

15. [48]

    The impugned payments were not made in preference to any other creditors of the Company and did not obviously expose the Company to the risk of litigation. The payments were for no more than the sums owing, and were not gratuitous or without precedent. Other loans had been repaid in early June, followed by new loans advanced by the same individuals in July 2017.

16. [49]

    Analysing the matter objectively in terms of s 588FDA(1)(c) of the Act, namely whether it may be expected that a reasonable person in the Company's circumstances would not have entered into the transaction, having regard to:

17. [50]

    First, a reasonable person in the position of the Company may be expected to pay their debts when due. This expectation would extend to the repayment of loans repayable on demand, at least in circumstances where such a payment did not prefer the lenders over any other creditors. Repayment may also reasonably be expected to maintain goodwill with lenders which would be beneficial for the Company in respect of any future lending needs.

18. [51]

    Second, as to the question of detriment, there was no net commercial detriment to the Company. The repayments extinguished a corresponding liability. Indeed, detriment to the Company’s commercial reputation would be expected to accrue if the Company did not repay debts, including loan obligations, when due.

19. [52]

    Third, in relation to the respective benefits to other parties of entering into the transaction, the other parties were relevantly Prashant Changela and his wife Sweta, and Vijay Pandya Pty Ltd. The benefit they received was the repayment of moneys lent informally to the Company but nevertheless in accordance with the terms upon which the primary judge held that the funds had been advanced, and consistent with the Company’s past practice. There was no benefit in any way resembling the types of benefits received in the cases noted in [30]-[31] above. The Appellants did not receive early repayment, or repayment in preference to other existing or contingent creditors of the Company.

20. [53]

    As to whether there was any other relevant matter that would give rise to an expectation that a reasonable person in the Company's circumstances would not have entered into the transaction, the matter fixed upon by the primary judge was the intention on the part of the Company at the time of repayment to enter into transactions in relation to the 2017 Crop. Plainly enough, no such transactions had been entered into at the time of the repayments and, as the evidence demonstrated, there was some uncertainty at the time surrounding the export market to India because of the possibility of an imposition of tariffs although Prashant Changela’s email of 20 September 2017 speaking of the next season “looking good for us already” (see [13] above) was consistent with a strong desire to continue the business.

21. [54]

    Whether or not the Respondent would require security for the sale of the 2017 Crop would be a matter for commercial negotiation between it and the Company. It was under no obligation to enter into commercial relations with the Company and it was open to it to satisfy itself, at the time of contracting, as to the Company’s financial position including its solvency. It is important not to make the s 588FDA assessment with the benefit of hindsight.

22. [55]

    The evaluation of the expectation of a reasonable person in the position of the Company must be made not only objectively but at the time at which the transaction was entered. Such a person would know that the Company had experienced a successful first year of operation notwithstanding the relative informality insofar as its financing arrangements was concerned, and the lack of other than nominal paid up capital.

23. [56]

    Taking all these considerations into account, the criterion in s 588FDA(1)(c) of the Act was not satisfied, and the primary judge erred in holding that the impugned payments were unreasonable director-related transactions for the purposes of s 588FDA of the Act.

Conclusion and orders

1. [57]

   For the above reasons, the appeal should be allowed with costs.

2. [58]

   The orders of the Court should be as follows:

   1. (1)

      Appeal allowed.

   2. (2)

      Vary the judgment of the primary judge made on 14 March 2025:

   3. (3)

      Pursuant to rule 51.19 of the Uniform Civil Procedure Rules 2005 (NSW), the Respondent pay restitution:

   4. (4)

      The Respondent pay the Appellants' costs of the appeal.

3. [59]

   LEEMING JA: I agree with the reasons of the Chief Justice, and with the additional reasons of McHugh JA.

4. [60]

   The following is added by way of emphasis rather than qualification. It is clear as a matter of authority that when an appellate court is asked to review the finding that a transaction falls foul of s 588FDA, it will ask whether, based on a review of the whole case, the necessary condition in s 588FDA(1)(c) for the transaction to be an unreasonable director-related transaction is made out. To someone reading the paragraph afresh, that might seem remarkable. That is because the paragraph is framed in terms not of whether a reasonable person would not enter into the transaction, but instead in terms of whether “it may be expected that” a reasonable person would not enter into the transaction. Both the word “may” and the idea of what might be “expected” are suggestive of a range of conclusions being available, rather than a single correct conclusion.

5. [61]

   However, those introductory words, and the identical language in s 588FB, do not bear their literal meaning. They have long been deprecated as “curious” (Lewis v Doran [2005] NSWCA 243; 219 ALR 555 at [156]) and “difficult to see what meaning is added” (Tosich Construction Pty Ltd (in liq) v Tosich (1997) 78 FCR 363 at 366-367). Courts have consistently proceeded on the basis that they serve only to emphasise the objective nature of the inquiry. They do not qualify or relax the condition in paragraph (c).

6. [62]

   A further reason why that must be so is that paragraphs (a), (b) and (c) are necessary and sufficient conditions for a transaction to be an unreasonable director-related transaction (that being the force of “if, and only if”). If paragraph (c) bore something close to its literal meaning, whereby one person might expect a reasonable person in the company’s circumstances not to enter into the impugned transaction, but a second person might have a different expectation, the section could not work: the expectation of the first person could lead to the section being satisfied, while that of the second would prevent the section being satisfied. That contradiction reinforces the conclusion already reached that the words “it may be expected that” are read merely as emphasising the objectiveness of the test.

7. [63]

   The reasons of Bell CJ and McHugh JA amply explain why the condition in s 588FDA(1)(c) is not satisfied. The orders proposed by the Chief Justice should be made.

8. [64]

   McHUGH JA: I have had the considerable advantage of reading in draft the reasons of the Chief Justice, and of Leeming JA, with which I agree. I also agree with the orders the Chief Justice proposes. I would add the following.

9. [65]

   The respondent’s argument in this Court had two main elements. First, that “the clear intention was to incur significantly more debts as at 20 September 2017”: Tcpt 4/8/2024 at 13.40. In light of the matters the Chief Justice canvasses, the clarity of that intention as at 20 September 2017 is to be doubted. Secondly, that the loan repayments “had the effect of reducing about a million in cash that the company was holding by about $500,000”: at 14.22.

10. [66]

    It may be expected that many small businesses in corporate form will be funded by informal loans, repayable on demand, from the persons who control the company. Whether it might be expected for the purposes of s 588FDA(1)(c) that a reasonable person in the company’s circumstances would not repay such a loan depends on all the circumstances at the time of repayment. It is not possible to lay down hard and fast rules to cover every situation. However, where a director advances working capital to a company on the basis that it is repayable on demand, and the company is solvent, and the repayment will not make the company insolvent, there are reasons to be cautious before concluding that it would be unreasonable for the company to use cash to repay the loan if demand is made, merely because the cash would otherwise be available for use in the company’s future operations (in particular, to discharge liabilities of unknown quantum that have not yet been incurred and that might never be incurred).

11. [67]

    Where a company intends to incur liabilities in the course of trading, a “transaction” within the meaning of s 588FDA(1)(a) that reduces the company’s cash position may well involve a “detriment” to it for the purposes of s 588FDA(1)(c)(ii). If the transaction is repayment of a director loan, the s 588FDA(1)(c) question is whether it might be expected that a reasonable person in the company’s circumstances would not make the repayment. If (a) the fact that the repayment reduced the company’s cash position, coupled with (b) the circumstance that the company intended to incur future trading liabilities in the ordinary course of business, were sufficient, without more, to satisfy s 588FDA(1)(c) in relation to solvent companies, it is not clear when it would be reasonable for a trading company to repay a director loan. If that were so, a rational director who hoped to be repaid might hesitate to fund the operations of solvent companies, noting that the period in s 588FE(6A)(b)(i) extends back 4 years from the relation-back day.

12. [68]

    Assume a company is solvent and that the repayment of a director loan that is due will reduce the company’s cash position but not make the company insolvent. To the extent that it is said that a reasonable person would not make the repayment because the company had incurred, or intended to incur, trading liabilities to third parties (which is the position here) — and putting to one side what other resources may be available to the company to discharge such liabilities — there is a significant difference between an existing liability in a known amount and a mere speculative possibility that the company may incur a trading liability in the future. In between those extremes lies a range of states of corporate intention and commitment. And, to the extent that it is said that repaying a director loan was unreasonable because the company was contemplating some other transaction involving particular risk, it is important to avoid hindsight bias.

13. [69]

    The nature and strength of any commercial rationale for repaying a director loan are also relevant to the reasonableness of doing so. Here, the Company’s business model was effectively seasonal. So too was the Company’s funding, informal as that was. The evident commercial rationale for repaying the loans at issue in this appeal was that the Company’s expected sources of capital to finance trading in the next season’s crop were the same lenders (its directors) who had financed the previous one. The lenders plainly expected to be repaid once the previous season’s trading operations were complete, and they were entitled to be paid. It was not to be expected that those lenders would advance further funds to the Company for the 2017 crop if it failed to repay the earlier loans when due. Given that the Company was not insolvent as at 20 September 2017, had no trade creditors, and had not made any commitment to trade in the upcoming season’s crop, and given that the loans were repayable upon demand, it is not obvious on what basis the Company could reasonably have refused to repay the loans. In those circumstances the criterion in s 588FDA(1)(c) was not satisfied.