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Insolvency Implications of ASIC Cross-Guarantee Class Orders
22/1/2013
By s.292(1) Corporations Act 2001 all public companies and large proprietary companies are to prepare a financial report and directors’ report for each financial year.
Insolvent Trading and Rent Debts
21/1/2013
Under s588G of the Corporations Act 2001 (Cth) directors of a company can be held personally liable if the company incurs debt when insolvent and there are reasonable grounds to suspect the company is insolvent. Criminal and civil sanctions can be imposed on a director who breaches s 588G.
Time Out: Liquidators Extension Applications Under s 588FF(3)(b) of Corporations Act 2001 (Cth)
13/12/2012
Section 588FF of the Corporations Act 2001 (Cth) permits the Court, on application of the liquidator of a company, to make specified orders if the transaction is a voidable transaction within three years after the relation-back day (simply, the first insolvency event) or 12 months after the appointment of a liquidator.
Liquidator Funding Agreement Approvals - Update
9/11/2012
In the September Insolvency Update in the case of Jones, Saker, Weaver and Stewart (Liquidators), in the matter of Great Southern Limited (in liq) (Receivers and Managers Appointed) [2012] FCA 807 , Siopsis J declined to approve the liquidator’s entry into a litigation agreement. Liquidators’ must adequately demonstrate prospects of success in potential litigation for the courts to approve entry into the agreement.
Insolvency Legal Update - September
6/9/2012
Welcome to Addisons Insolvency Update for September 2012. Recent months have brought a myriad of legal developments in the insolvency/restructuring field. We report on some of these in the attach newsletter.
Insolvency Legal Update
11/7/2012
Welcome to the Addisons Insolvency Update for July 2012.
Recent months have brought many developments in the insolvency, corporate and financial services fields. We report on some of these.
Insolvency - Legal Update
28/3/2012
Welcome to Addisons Insolvency Update for March 2012.
Recent months have brought a myriad of legal developments in the insolvency/restructuring field. We report on some of these.
Creditors Meeting - Court of Appeal Favours Substance Over Speculation - Vero Insurance Ltd v Kassem - Updated
13/3/2012
A creditor seeking to set aside a Deed of Company Arrangement must be able to demonstrate with sufficient certainty that: (1) the company has engaged in suspect transactions requiring investigation; and (2) placing the Company in liquidation will produce a better result for creditors.
“Palliative Care”: Conversion and Damages in the Pallet Hire Business
13/2/2012
The New South Wales Court of Appeal held in Bunnings Group Limited v CHEP Australia Limited [2011] NSWCA 342 that the use by Bunnings of CHEP’s wooden pallets for the delivery of goods from its distribution centres to its stores constituted an intentional dealing with CHEP’s lawful property that was repugnant to its ownership rights, thus being a tort of conversion.
Refusal by Bunnings to comply with CHEP’s lawful demands for return of its property amounted to unlawful detinue.
Damage was the loss of potential hire revenue.
Can a Registered Proprietor Caveat to Protect Against a Mortgagee’s Wrongful Exercise of the Power of Sale?
9/12/2011
The Supreme Court of South Australia held in Stone v Leonardis [2011] SASC 153 that a mortgagor may caveat to protect its interest as registered proprietor when a mortgagee wrongfully exercises its power of sale.
Loans with No Repayment Terms – Can Equal “Gift”?
5/12/2011
It is common for loans particularly between family and friends to contain no term as to repayment. This may lead people to believe that the money only becomes payable when the other party demands its return. That is incorrect. A loan of money which contains no agreed repayment term becomes continuously recoverable at all times. Therefore any cause of action arises the instant the money is advanced.
Failure to Keep Adequate book and Records Renders Directors Liable for Compensation? - Bad Record Keeping Equals Big Claims Against Directors?
22/9/2011
It is very common for insolvent companies, in particular, to have deficient books and records. As a result of a recent Supreme Court of NSW case there is potential for companies to pursue directors for equitable compensation for the failure to keep proper books and records in accordance with the Corporations Act 2001. The floodgates may open!
Can a Creditor Claim Damages against a Director?
24/8/2011
Generally, directors do not owe a direct duty to creditors. Directors owe a duty to a company to consider the interests of creditors including the ability of the company to repay them. Thus, often a liquidator or a receiver of a company will cause the company to sue directors for breaches of that duty.
Creditors Meetings – Make Your Vote Count
8/9/2010
The Corporations Act 2001 (Cth) provides for calling and holding creditors meetings for insolvency external administrations. A corporate creditor can appoint a natural person as its proxy to attend and vote at a creditors meeting on the company’s behalf.
Committees of Inspection – Caution!
4/8/2010
In Jindal Transworld PVT Ltd v Scottsdale Homes No. 10 Pty Ltd (No 2) [2010] SASC 210 (13 July 2010), a liquidator sought an order that his remuneration be fixed under s473(3) of the Corporations Act 2001. It was opposed by the company’s only creditor on the basis of entitlement and quantum, and that the application was not competent because s473(3)(a) was not satisfied. That section prescribes that a liquidator’s remuneration can be determined, if there is a committee of inspection (“COI”), by agreement between the liquidator and the COI. The creditor argued s473(3)(a) was a condition precedent to any court application.
Retention of Title Clauses – Court of Appeal
4/8/2010
Suppliers need to be careful in drafting retention of title clauses to ensure they operate as intended. When making payment, financiers ought identify the goods to which a payment relates to avoid disputes. Insolvency practitioners should take note of how ROT clauses can be challenged. In this case, the supplier’s appeal was dismissed, and a third party purchaser had good title.
Caveats – Preventing a Mortgagee’s Power of Sale
7/7/2010
A registered proprietor (“Plaintiff”) lodged caveats on 30 April 2010 to prevent registration of transfers pursuant to mortgagee sales. On 28 May 2010 (“First Proceedings”) the Court held the caveats were invalid and the balance of convenience did not favour an extension of the caveats. The Court ordered the caveats be immediately removed to allow settlement to proceed as scheduled on 31 May 2010. The Plaintiff then lodged further caveats on 31 May 2010 preventing settlement. On 22 June 2010 (“Second Proceedings”) the Court ordered these further caveats be removed.
Privilege Against Self-Incrimination
22/6/2010
Witnesses should be aware of their right to claim the privilege against self-incrimination, and when and how it can be claimed. It is important to not inadvertently waive the privilege by voluntarily giving incriminating evidence.
Conversion and Detinue – Caution!
15/6/2010
Any demand for the return of goods ought be given serious consideration. Continued use of someone else's goods without intention to "convert" may be conversion, and refusal to deliver up the goods may be detinue. Poor record keeping and ignorance are no excuse. Refusing audits to ascertain ownership will not be looked upon favourably by a Court.
Caveats – Scope and Unstamped Instruments
1/6/2010
A caveator ought ensure that the instrument founding the caveat is stamped, the caveat does not extend beyond the caveator’s interest in land, and does not restrict the registered proprietor more than necessary to protect the caveator’s interests.
Insolvency – When is a Creditor Compromise Deed of Company Arrangement Ineffective?
5/5/2010
Pursuant to s447A of the Corporations Act 2001 (“Act”), a deed of company arrangement (“DOCA”) which had terminated by performance was set aside. The DOCA was found to be against the interests of the unsecured creditors, and oppressive, as unsecured creditors received no distribution after the administrator’s fees were paid.
Update – Assessment of damages for conversion and rent in Rapid Metal Developments
3/3/2010
As we reported in our recent FocusPaper, the Supreme Court of NSW held in Rapid Metal Developments (Aust) Pty Ltd v Rildean Pty Ltd [2009] NSWSC 571 (26 June 2009) that agents for a mortgagee in possession (“controllers”) were personally liable to pay hire charges accruing under an agreement entered into by the failed company prior to the appointment. They were also liable for conversion. The controllers of Rildean had taken possession of RMD’s scaffolding, which had been comingled with scaffolding from other sources.
Rent and Damages for Conversion - Controllers Liable - Warning!
2/2/2010
The Supreme Court of NSW held in Rapid Metal Developments (Aust) Pty Ltd v Rildean Pty Ltd [2009] NSWSC 571 (26 June 2009) that agents for a mortgagee in possession were personally liable to pay rent accruing under an agreement entered into by the failed company prior to the controllers' appointment. The controllers were also liable for conversion for selling the goods. The controllers took possession of the plaintiff's scaffolding which had been commingled with scaffolding from other sources
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