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.
Category: Insolvency Law
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.
PERSONAL PROPERTY SECURITIES REGISTER (PPSR) – Applicant registered security interest in collateral (helicopter) – helicopter stolen and sold to other party – other party on-sold helicopter to third party and applied to register financing change statement to end applicant’s interest – meaning of “security interest” – decision affirmed
A recent judgment of O’Callaghan J confirms that rental expenses incurred during the statutory ‘no liability’ period following an administrator’s appointment may be afforded priority in a subsequent winding up, despite the fact that the administrators are not personally liable for those expenses.
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.
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.