A proposed shakeup of the UK’s corporate insolvency regime will impose a three month freeze on legal action against stressed businesses who are investigating rescue options.  In addition to this moratorium, measures have been suggested to help businesses to continue trading through the restructuring process.  The intention is that this will prevent struggling companies being held to ransom by key suppliers, and will also assist in developing flexible restructuring plans.  The proposal would make rescue schemes binding, even on secured creditors.

In March 2013, four portable gas turbines worth about AU$50m had been leased to Forge Group Power Pty Ltd (Forge) by GE International Inc (GE) as lessor.  In February 2014 and March 2014 Forge was placed in administration and liquidation respectively.

Torchlight Fund No 1 (Torchlight) contracted with Wilaci Pty Ltd (Wilaci) for a $37m loan. The terms included the payment of a 'late fee' of $500,000 per week.  Following default, Torchlight applied for a declaration that the fee was a penalty, and therefore unenforceable.  Torchlight also applied for directions as to the payment of the costs of the receivers appointed by Wilaci, arguing that a clause indemnifying Wilaci in respect of a default did not apply to such costs.  

In a recent costs decision, the English High Court partly disallowed an indemnity sought by receivers in respect of costs payable to certain third parties and the receivers' own costs and expenses for certain steps.

In the recent UK case of Williams v Glover & Anor, the Court considered the novel issue of whether the right to appeal against a tax liability constitutes the "property" of a company in liquidation, in deciding whether such a right was assignable or not. In that case, the applicant liquidator sought directions as to whether it could assign the right to appeal against an assessment of tax liability to the respondent former directors of the company in liquidation. Judge Pelling QC held that while there were authorities that had considered this point, they were not binding.

The Federal Court of Australia in KASH Aboriginal Corporation ICN 108 (Administrators Appointed) No 2, held that, in certain circumstances, administrators may be granted protection from personal liability for debts incurred as part of the administration of a corporation.

This update deals with the significant appeal judgment released yesterday by the Court of Appeal in the proceedings brought by the liquidators of Mainzeal Property and Construction Ltd (in Liq) (Mainzeal) against its directors. Our previous legal updates on the High Court decisions can be found here and here.

The Federal Court of Australia in Frisken, in the matter of Avant Garde Investments Pty Ltd v Cheema [2020] FCA 98 has considered a dispute between a receiver and the director of the company as to whether the provisional liquidator, Mr Banerjee, should be appointed as the liquidator. 

The director sought the appointment of different liquidators on the basis that Mr Banerjee’s conduct as provisional liquidator was such that a reasonable person might apprehend that he might not be impartial as liquidator. 

The Insolvency and Company Court of England and Wales recently held in Sell Your Car With Us Ltd v Anil Sareen [2019] EWHC 2332 (Ch) that, when a debtor fails to comply with a statutory demand and has no arguable case to dispute a debt, a winding-up petition (initiation of liquidation proceedings) is appropriate, despite judges previously expressing distaste towards the use of a petition as a method of debt collection.

In Lafferty v Official Assignee Gordon J considered Mr Lafferty's appeal of two decisions of the Official Assignee to refuse Mr Lafferty's applications under section 62(1)(a) of the Insolvency Act 1967 to enter or carry on business while bankrupt.

Gordon J dismissed the appeal on the basis that Mr Lafferty could not show that the Official Assignee had made an error of law, failed to take into account relevant considerations or was manifestly wrong in exercising its discretion under regulation 34 of the Insolvency Regulations 1970.