Gazing into the crystal ball – when assessing whether a company is insolvent, how far into the future should the Court look?
In Anchorage Capital Master Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2),[1] the NSW Supreme Court handed down judgment in two proceedings (which were heard together) arising from the failure of Arrium and its broader corporate group.[2] Of particular interest to insolvency practitioners, the Court was asked to […]
ReadmoreLiquidators beware: pitfalls in admitting proofs of debt
The Federal Court’s decision in Tuscan Capital Partners Pty Ltd v Trading Australia Pty Ltd (in liq)[1] concerns an interlocutory application made by a creditor to review the liquidator’s decision to admit a proof of debt. Background The proof of debt was lodged by Fishbank Development Corporation Pty Ltd (FDC) in the amount of $56,289.43, […]
ReadmoreWhat did the Federal Court say when it recently considered joint legal professional privilege?
In Kayler-Thomson v Colonial First State Investments Limited (No 2),[1] the Federal Court considered the issue of joint legal professional privilege and confirmed that it can only be waived by the actions of all holders of the privilege. Background Mr Keith Kayler-Thomson (Mr Kayler-Thomson) was an applicant in representative proceedings brought against Colonial First State […]
ReadmoreFederal Court approves administrators’ entry into funding deed to trade company pending sale
Section 90-15 of the Insolvency Practice Schedule (the IPS) confers on Courts wide powers to adjust rights related to companies in external administration. Here, the administrators of a mining group obtained orders approving their entry into a deed to fund the ongoing operation of the group pending sale and limiting their liability under the deed […]
ReadmoreDrawing Inferences – the extent that evidence can be inferred
In Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias,[1] the Federal Court considered the extent to which a Jones v Dunkel[2] inference can be made. There were three factual issues to be determined by the Court and both parties relied heavily on inferences to prove their case. Ultimately, […]
ReadmoreThe ‘Constitutional Imperative’ – a bankrupt’s right to review a sequestration order
In Bechara v Bates,[1] the Full Federal Court reminds us of the proper procedure for review of a sequestration order made by a registrar. This case raises an important point about bankruptcy practice and procedure in the Federal Circuit Court and the Federal Court. Sometimes described as a ‘constitutional imperative’, a bankrupt is entitled to […]
ReadmoreIf you have a need for speed, don’t allow this to compromise the correct registration of your PPSR security interest
In Rohrt, in the matter of Rose Guerin and Partners Pty Ltd (in liq) v Princes Square W24NY Pty Ltd,[1] the Federal Court of Australia held that as BMW failed to correctly register their security interest in a 2017 Ferrari GTC4 Lusso (by registering against the ACN of a corporate trustee but not against the […]
ReadmoreThe Federal Court takes aim in Gunns – and extinguishes the Peak Indebtedness Rule in Australia
On 10 May 2021 in Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq)(receivers and managers apptd)[i] the Full Court of the Federal Court of Australia abolished the application of the Peak Indebtedness Rule to a running account ‘single transaction’ under section 588FA(3) of the Corporations Act 2001 (Cth) […]
ReadmoreSmall Business Insolvency Law Reform: One size does not fit all
On 1 January 2021, a number of changes to Australia’s insolvency framework came into effect, pursuant to the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) (the Act). The reforms, which were first announced by the Government in September 2020, replace the former ‘one size fits all’ insolvency approach under the Corporations Act 2001 and introduce further alternatives for […]
ReadmoreSolving the ‘classic insolvency conundrum’ – how should insufficient, comingled funds be distributed?
In Caron and Seidlitz v Jahani and McInerney in their capacity as liquidators of Courtenay House Pty Ltd (in liq) & Courtenay House Capital Trading Group Pty Ltd (in liq) (No 2),[1] the New South Wales Court of Appeal was faced with what it described as the ‘classic insolvency conundrum’: how to distribute funds to investors as equally […]
ReadmoreNew insolvency reforms to support small business recovery proposed to commence from 1 January 2021
The recently announced proposed insolvency reforms draw on key features from Chapter 11 of the Bankruptcy Code in the United States and aim to help more small businesses restructure and survive the economic impact of COVID-19. The reforms will cover around 76% of businesses subject to insolvencies today, 98% of whom have less than 20 […]
ReadmoreCOVID-19 | Emergency Amendments to Insolvency Laws: What’s next?
In March, we reported that, as part of a suite of legislative and economic responses to COVID-19 the Commonwealth Government had announced a range of temporary amendments to certain insolvency laws. The amendments were aimed at temporarily amending insolvency laws, affecting in turn corporate governance, and directors’ duties. The purpose of the amendments was to […]
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