The recent decision of Metigy Pty Ltd (in liq) (applications for settlement approval) [2023] FCA 818 reminds liquidators and trustees of the prerequisites they must satisfy in seeking judicial advice. Failure to meet these criteria may result in the court refusing to exercise its jurisdiction to give such advice.
The facts
The increasing spread of COVID-19, and now the unprecedented measures being taken by governments to slow that spread, is having and will continue to have a significant impact on economies around the globe, including Australia. As the situation has not been seen before, it is difficult for businesses and individuals to plan ways to limit the impact on their ability to continue trading – and pay their debts.
In recognition of the unique challenges facing businesses today, the Australian Government has responded by acting to relax laws relating to insolvency.
Recent amendments brought about by the National Health Amendment (Pharmaceutical Benefits) Bill 2019 (Cth) allow for the supply of pharmaceutical benefits by approved pharmacies under the Pharmaceutical Benefits Scheme (PBS) to continue following external administration or bankruptcy (section 91B, National Health Act 1953 (Cth) (Act)).
A 20 June 2020 decision of Justice O’Callaghan in the Federal Court confirms that rent incurred during the ‘no liability’ period will be payable as a priority expense in the liquidation of an insolvent tenant. This is regardless of whether or not the no liability period has been extended by the Court on application by the administrators.
The key facts
In an economic climate where the risk of insolvency is high, it is paramount to that creditors are prepared for debtors going into administration. Participation as a creditor does not have to be passive. The ability to understand and protect your own interests, can be enhanced with knowledge and early action.
In this article, we pinpoint eight key considerations landlords should be mindful of when dealing with the administration process, and outline key action items from day one.
Key considerations
In a recent decision[1] the Supreme Court of Western Australia was asked, pursuant to section 447A of the Corporations Act 2001 (Cth), to appoint a special purpose administrator to cure a perceived conflict of interest between a company (in administration) and the original administrator appointed to the company.
From 1 July 2012, all insolvency notices must be registered with the Australian Securities and Investments Commission (ASIC) on its new online register at www.insolvencynotices.asic.gov.au. Consequently, ASIC’s online register now serves as a comprehensive noticeboard of companies’ affairs in relation to insolvency. More importantly, it provides important information for creditors.
The recent Federal Court decision of ASIC & Franklin & Ors [2014] FCA 68 represents, respectfully, a noteworthy exercise by the Court in applying the law in a commercial common sense manner.
Justice Davies was asked to consider ASIC’s application for disqualification of the Liquidators of Walton Construction Pty Ltd (in liq) and Walton Construction (Qld) Pty Ltd (in liq) (the Companies). The Liquidators were appointed the Administrators of the company having been referred to the directors of the Companies by Mawson Group.