On 24 December 2020, the Federal Court of Australia published reasons for a decision in which I appeared for the liquidators of two related companies, Bestjet Travel Pty Ltd (in liq) and Wynyard Travel Pty Ltd (in liq). The decision can be accessed here.
As part of the its efforts to stem the effects of the COVID-19 pandemic on the Australian economy, the Federal Government has recently introduced a number of ‘safety net’ provisions designed to avoid financially distressed individuals and companies being forced into, respectively, bankruptcy and liquidation.
The objective is to allow them to continue trading where possible.
The reforms
The Victorian Court of Appeal decides that the Corporations Act priority regime does apply to trading trusts.
The law is now clear. Or is it?
For the last two years and six days, insolvency practitioners and other stakeholders involved in the liquidation of trading trusts have been frustrated by what should be a very straightforward question.
If the company in liquidation carries on business through a trust structure, as many do, what is the order of priorities that the liquidator must apply when making distributions to creditors?
On 28 March 2017, the Federal Government released draft reform legislation to Australia’s insolvency laws to promote a culture of entrepreneurship and help reduce the stigma associated with business failure.
The reforms, known as ‘safe-harbour’ provisions propose changes to directors’ personal liability for insolvent trading under the Corporations Act 2001 (Cth) (Act).
Background
On 23 February 2016, Justice Brereton in the New South Wales Supreme Court handed down the decision in the matter ofIndependent Contractor Services (Aust) Pty Ltd ACN 119 186 971 (in liquidation) (No 2) [2016] NSWSC 106.
This is an important judgment, with significant consequences for the insolvency community.
The decision deals with two fundamental aspects of insolvency law, being:
On 4 September 2014, the Government introduced the Fair Entitlements Guarantee Amendment Bill 2014 to the House of Representatives (Bill). The Bill is intended to amend the Fair Entitlements Guarantee Act 2012 (Cth) so as to limit the entitlements payable by the Government to those employees made redundant due to the liquidation or bankruptcy of their employer.