On 19 June 2019, the High Court delivered its judgment in one of the most hotly anticipated insolvency judgments this year, the Amerind appeal: Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth.
The High Court unanimously dismissed the appeal, upholding the Victorian Court of Appeal’s decision and confirming (although for differing reasons) that:
In a decision of considerable concern to creditors1, the High Court has determined that a bankruptcy notice founded on a judgment debt is open to challenge on the basis that there is a “sufficient reason” for questioning the underlying debt – even if that judgment was the product of a fully contested trial in which both parties were legally represented, and was not procured by fraud or collusion.
In a decision which potentially increases the assets available to liquidator and bankruptcy trustee plaintiffs, the High Court in CGU Insurance v Blakeley1 has recently determined that plaintiffs may seek to join insurers to proceedings in circumstances where indemnity under the insurance contract is denied and the defendants to the primary claim are bankrupt or being wound up or likely to become so as a result of the claim.
On 10 December 2015, a majority of the High Court of Australia ruled inCommissioner of Taxation v Australian Building Systems Pty Ltd (In Liquidation)1 that liquidators are not obliged to, and are not personally liable for, failing to retain sufficient funds for the purpose of discharging a tax liability until the Commissioner issues a notice of assessment.
What does this mean for practitioners?
Part 5.3A of the Corporations Act (Act) provides a regime for a company that is insolvent or likely to become insolvent to maximise the chance of the company continuing to trade or a proposal which results in a better return to creditors rather than its immediate liquidation. Part 5.3A sets out the requirements for the appointment of a voluntary administrator to the distressed company with a view to the company possibly executing a deed of company arrangement (DOCA) with its creditors.
A Supreme Court of New South Wales decision in February 2014 is a timely reminder to creditors to ensure that agreements clearly articulate arrangements where funds are to be held on trust for a specific purpose. The Court revisited the question of the entitlement to retention funds and competing creditor claims in the matter of National Buildplan Group Pty Ltd (subject to deed of company arrangement)(Buildplan)