The Federal Court has recently handed down a decision that clarifies the power of receivers to administer trust property under a debenture. In Benton, in the matter of Mackay Rural Pty Ltd (Receivers and Managers Appointed) [2014] FCA 1285, the Federal Court confirmed that section 420 of the Corporations Act 2001 (“the Act”) confers upon receivers a power to dispose of trust property, provided that this is necessary for the purpose for which they have been appointed.

FACTS

The respondent in this matter, Mr Culleton, owed Macquarie Leasing Pty Limited (Macquarie) a debt arising out of two chattel mortgage agreements.

Macquarie obtained judgment against Mr Culleton in the amount of $94,304. The judgment debt was not paid and Macquarie petitioned for a sequestration order to be made against Mr Culleton’s estate.

Macquarie served the Bankruptcy Notice on Mr Culleton by affixing it to a padlocked gate at his last known address.

Connections Total Fitness for the Family Pty Limited (Connections) operated a gym on premises owned by Selkirk Pastoral Co Pty Limited (Selkirk). The gym business ultimately failed and ceased trading when administrators were appointed on 4 October 2013. Connections’ assets were limited to some cash at bank and a $1.1m claim against Selkirk.

In Rathner in his capacity as Official Liquidator of Kalimand Pty Ltd (in liq) v Hawthorn [2014] FCA 1067, the Federal Court considered the elements of voidable transactions under Pt 5.7B of the Corporations Act, and the meaning of becoming insolvent “because of” entering into a transaction.

FACTS

InKitay, in the matter of South West Kitchens (WA) Pty Ltd [2014] FCA 670, Mr Kitay was appointed liquidator of South West Kitchens (WA) Pty Ltd (SW Kitchens) by voluntary winding up. SW Kitchens was trustee of a trust and owned all its assets as trustee of that trust. The trust deed provided that SW Kitchens was disqualified from acting as trustee if it was wound up.

On 11 September 2014, the Supreme Court of NSW handed down its decision in Allco Funds Management Limited (Receivers and Managers Appointed) (In Liquidation) v Trust Company (RE Services) Limited (in its capacity as responsible entity and trustee of the Australian Wholesale Property Fund) [2014] NSWSC 1251.

The decision has highlighted the risks associated with the involvement of directors in transactions where they are in a position of conflict.

THE FACTS

In the recent decision, In the matter of Mirabela Nickel Ltd (subject to deed of company arrangement) [2014] NSWSC 836, the NSW Supreme Court has granted leave to the deed administrators under section 444GA of the Corporations Act 2001 (Cth) (Act) to transfer 98.2% of the existing shares of Mirabela Nickel Ltd (Mirabela) to unsecured creditors without the consent of its shareholders.

FACTS

In the decision of Saker, in the matter of Great Southern Limited[2014] FCA 771, the Federal Court of Australia held that statutory obligations, not trust obligations, require receivers and liquidators to hold and apply funds for the benefit of employees pursuant to s 561 of the Corporations Act 2001 (Cth).

FACTS

The recent decision of the Federal Court in Canadian Solar (Australia) Pty Ltd v ACN 138 535 832 Pty Ltd (subject to deed of company arrangement) [2014] FCA 783, is a useful reminder that a deed of company arrangement (DOCA) approved by a majority of creditors at the second creditors meeting can still be terminated by order of the Court if it is found to be unfairly prejudicial to one or more creditors or contrary to the interests of creditors as a whole. 

In the matter ofMustang Marine Australia Services Pty Ltd [2014] NSWSC 1074, Brereton J of the New South Wales Supreme Court held that there is no principle that before instituting proceedings a liquidator must be satisfied of the material facts that constitute its cause of action, and that absent such satisfaction the proceedings are an abuse of process. As long as proceedings are instituted for bona fide relief claimed and are not doomed then there is no abuse of process.

FACTS