The New South Wales Court of Appeal has allowed an appeal against orders for distribution from a co-mingled fund held by insolvent entities and, in doing so, has provided guidance for liquidators and creditors alike on the various methods for distribution and the principles of tracing.
Category: Insolvency Law
This note summarises the changes to the statutory demands regime and to insolvent trading laws applying to directors and holding companies effected by the Coronavirus Economic Response Package Omnibus Act 2020 (Cth).
Administrations of companies in group – COVID-19 – meetings of creditors and of committee of inspection conducted by telephone or audio-visual conference only – amendment to procedure for selecting committee of inspection – extension of relevant time periods for responding to requests from creditors and to give notice to lessors of property possessed by the company
The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) received Royal Assent on 17 February 2020. A number of important measures targeted at ‘phoenix activity’ have now taken effect, including the duty imposed on company officers to prevent ‘creditor-defeating dispositions’.
The High Court has unanimously held that property held by a bankrupt on trust for third parties in which property the bankrupt had a beneficial interest vested in the trustee in bankruptcy.
Court reduces administrators’/liquidators’ excessive remuneration due to inadequate remuneration reports
In Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq)  FCA 93, the Court reduced the plaintiffs’ remuneration of approximately $5.7 million.
A U.S. bankruptcy trustee has failed in his attempt to use the UNCITRAL Model Law on Cross-Border Insolvency to access Australia’s domestic voidable transaction regime. The case provides some some important insights into the scope, and limits, of the Model Law.
NSW Court of Appeal decision on security of payment regime confirms conflict between Victoria and NSW on the applicability of the regime to insolvent companies
The recent decision of the NSW Court of Appeal in Seymour Whyte v Ostwald confirms that the position in NSW conflicts with the Victorian position on the question of whether the security of payments regime applies to companies in liquidation.
The Full Court of the Federal Court recently considered the fiduciary duties of directors arising out of a dishonest scheme claiming tax deductions that weren’t available to the companies, resulting in liquidation.
Two companies which contended they were ‘unquestionably solvent’ were unsuccessful in an application to injunct a party from instituting proceedings to wind them up. This decision clarifies the extent to which the case law on abuse of process made prior to the enactment of Part 5.4 of the Corporations Act continues to apply.
Disclaiming an insolvent company’s environmental obligations: the case of Linc Energy Ltd (in liquidation)
In Longley v Chief Executive, Department of Environment and Heritage Protection  QCA 32, the Queensland Court of Appeal has clarified the ability of liquidators to disclaim onerous property, including obligations that arise in respect of that property under State environmental legislation.
The Victorian Court of Appeal and a Full Court of the Federal Court have each recently held that the statutory priority regime applies to the winding up of companies that act as trustees of trading trusts, confirming that employee claims and a liquidator’s remuneration and costs are priority debts. Special leave to appeal the Court of Appeal’s decision has been sought.
Can you prefer one creditor by arranging a third party loan, the proceeds of which are paid directly to that creditor, without the arrangement being void against your trustee in bankruptcy? “Yes” says the Full Federal Court – thus confirming an important distinction between personal and corporate insolvency.
Winding up: perfected security interests registered on the PPSR and funds held post-DOCA termination
Funds remaining in a company after a DOCA is terminated may still constitute collateral for a perfected security interest registered on the PPSR if the security deed is drafted in appropriate terms.