When served with an unfair preference claim, creditors can potentially defend themselves with a number of statutory defences.
A running account defence is well known and is generally accepted as a starting point by most liquidators to reduce the preference, usually by reference to the peak indebtedness rule.
More recently creditors have relied on a “new” defence, the set-off defence, in efforts to reduce or diminish a preference claim by a liquidator. This defence is a controversial one because many commentators think it should not be applied to unfair preferences.
Even more controversial is the possibility that the running account and the set-off defence can be applied by a creditor at the same time. The possibility exists, but we have yet to see a decision in which the two regimes have been applied together.