One of the first tasks required of an administrator appointed to a company is to facilitate communications with creditors and conduct creditors’ meetings.
The below decision considers these tasks against the backdrop of public health orders designed to reduce the spread of COVID-19, and the Court’s continued broad application of section 447A of the Corporation Act 2001(Cth) (Act) and section 90-15 of the Insolvency Practice Schedule (Corporations)(Schedule).
The Treasury Laws Amendment (Combating Illegal Phoenixing) Act 2020 (Cth) (Act) came into operation on 18 February 2020, and is intended to assist ASIC and liquidators to ‘detect and disrupt phoenix activity, and to prosecute directors and other professional advisors who engage in or facilitate the activity’.
On 15 April 2020, the Federal Court provided the Administrators of Colette with relief from personal liability with respect to the company’s lease obligations.
Colette entered administration in February 2020, prior to the Coronavirus pandemic in Australia. In early March 2020, Administrators noticed sales had begun to substantially decline which had resulted in the company operating at a loss. The decline in sales dropped even further following the Government’s announcements regarding social isolation measures.
In a recent decision of the New South Wales Supreme Court, Justice Black declined to provide Court approval to the provisional liquidators for payment of disbursements that contain a profit element.
His Honour observed that two fundamental questions arise when determining whether an external administrator may derive a profit from disbursements:
It is said that Sisyphus, the ancient king of Ephyra, is destined for eternity to roll a boulder uphill, only to watch it roll down again. Perhaps Sisyphus should have been a liquidator. One could certainly forgive the liquidator of Aberdeen All Farm Pty Ltd (In Liq) (Aberdeen) for thinking so.
After taking appointment in February 2018, Aberdeen has been embroiled in Supreme Court litigation, by which certain parcels of land were claimed to have been held on trust for Barry McWhinney as a result of an alleged fraud.