The prohibition against creditor-defeating dispositions under s 588FDB has been considered and applied for the first time since its introduction over two years ago. The conduct in question was found to be a brazen and audacious example of phoenixing and the Supreme Court of Victoria made orders voiding the relevant contract.
Category: Insolvency Law
Unreasonable director-related transactions: can the available remedies be ordered in the case of a solvent company?
In a recent decision, Justice Anastassiou of the Federal Court held that liquidators of a solvent company may be entitled to the remedies available under the Corporations Act where that company is found to have made an unreasonable director-related transaction in breach of section 588FDA of the Act.
In a members’ voluntary winding up, the Court exercised its powers under s 1322 of the Corporations Act 2001 (Cth) and s 90-15 of the Insolvency Practice Schedule (Corporations) to cure issues arising from the passing of important members’ resolutions by power of attorney.
The Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) has expanded the methods by which documents under Chapter 5 of the Corporations Act 2001 (Cth) can be served, even where the person being served has given no indication that they will accept service electronically.
The Full Court of the Federal Court confirms that a statutory set-off under s 553C(1) of the Corporations Act 2001 (Cth) is not available against a liquidator’s claim for the recovery of an unfair preference under s 588FA of the Act.
In ASIC v King, the Federal Court recognised the Court’s jurisdiction to bankrupt a debtor on the petition of a creditor who is owed a debt that is not provable in bankruptcy (in this case, a pecuniary penalty order), finding that it is a matter of discretion whether to make a sequestration order.
The Court considered the meaning of insolvent in a contractual context, distinguishing it from the meaning of insolvent for the purposes of the Corporations Act. It concluded that the respondent was insolvent at the relevant time, despite the fact that it was continuing to trade at the time of the hearing, years later.
The Court of Appeal’s judgment in Australian Sawmilling Company Pty Ltd (in liq) v Environment Protection Authority  VSCA 294 clarifies that a liquidator may be an ‘occupier’ for the purposes of the Environment Protection Act 1970 (Cth).
McCallum, in the Matter of Re Holdco Pty Ltd (Administrators Appointed) (No 2)  FCA 377 (21 April 2021)
Valuing intellectual property – registering security interests concerning intellectual property on the Personal Property Securities Register (“PPSR”)
The New South Wales Supreme Court has provided welcome guidance on the relevance of future events to the question of solvency. Specifically, the Court has provided a roadmap on the relevance of (i) future debts which the company may not be able to repay; and (ii) the ability of the company to compromise those debts.
The Full Court of the Federal Court considered the continuing business relationship exemption under s 588FA(3) of the Corporations Act and the validity of the peak indebtedness rule as a matter of Australian law.
The Court of Appeal has clarified the application of the unfair preference regime to payments by third parties to creditors at the direction of the debtor. In short, to be ‘from’ the debtor, the payment must diminish the assets available to its other creditors. Merely being related parties will not be sufficient.
The 2020-21 Federal Budget papers released on 6 October 2020 contained a potentially significant measure relating to the carry-back of company income tax losses to prior years, as explained in this note.
The Supreme Court of Victoria recently delivered judgment in the matter of Redstar Transport Pty Ltd (in liq). The case provides helpful guidance for liquidators of corporate groups looking for remuneration recovery absent a pooling order.