If you are planning a corporate reconstruction, then this Bulletin is relevant to you. This bulletin focuses on the amendments to the Duties Act in relation to the exemption from stamp duty available in relation to a corporate reconstruction.
On 11 April 2012, the State Revenue Legislation Amendment Act 2012 No. 20 (Amending Act) was passed.
In Hussain v CSR Building Products Limited; In the matter of FPJ Group Pty Ltd (in liquidation) the Federal Court held that a retention of title (ROT) clause secures the purchase price of the goods it covers, and that payment of that price will not be an unfair preference since the creditor has not received payment of an “unsecured debt” within the meaning of section 588FA of the Corporations Act 2001 (Cth).
A recent decision of the Federal Court provides a timely warning for businesses engaged in cross-border trade where debts may be expressed in a foreign currency. The take away point of the decision is that in issuing bankruptcy notices based on a judgment debt expressed in a foreign currency and allowing for payment in Australian currency, care must be taken to ensure the correct foreign exchange rate is applied.
A recent case[1] is a reminder to creditors in a voluntary winding up that the Court has the power to appoint an additional or special purpose liquidator (SPL) to carry out a set function in the orderly liquidation of a company where it is 'just and beneficial' to do so.
What is a special purpose liquidator?
The final Report of the Whittaker Review into the Personal Property Securities Act 2009 (Cth) (PPSA) was tabled in Federal Parliament on 18 March, 2015. The Report can be found here. Our focus here is on key issues in the Report for the hire industry. There are many, many other recommendations in the 542 page Report which we do not discuss here.
In Kisimul Holdings Pty Ltd v Clear Position Pty Ltd, a decision seemingly inconsistent with established law, the Supreme Court of NSW earlier this year held that an omission in the affidavit supporting a statutory demand did not amount to “some other reason why the demand should be set aside”. The NSW Court of Appeal has now reversed the decision, restoring a degree of certainty in this much-litigated area of law.
The Law
Approximately 11 years ago, largely as a result of public resentment of bonuses being paid to directors of insolvent companies, the Corporations Act was amended by the Corporations Amendment (Re-Payment of Director’s Bonuses) Act 2003. The amendment made it possible for liquidators to not only seek to recover director bonuses but to also recover any “unreasonable director-related transactions” pursuant to the newly added section 588FDA of the Corporations Act.
Legislation
The Full Court of the Federal Court has recently confirmed that the “slip rule” can be used to retrospectively extend the life of a creditor’s petition, but has highlighted that the rule only applies if certain conditions are met.
The law
When a company is placed into liquidation, the company’s available funds are paid to general unsecured creditors on a pro rata basis by way of a dividend payment. However, certain classes of creditors are given priority in the payment of dividends, including employees who are owed wages and other employment entitlements by the company.
What is the position if a person advances money to a company, after it has been placed into external administration, to allow the company to pay wages or other entitlements to employees?
You are a judgment creditor with a charge over the judgment debtor’s assets and have lodged a caveat over a property owned by judgment debtor. You finally receive word from the judgment debtor that the property has been sold and you are asked to provide a withdrawal of caveat. You agree, subject to being paid the judgment debt at settlement in exchange for the withdrawal. Your request is followed by silence, and then a lapsing notice is served upon you. Your caveat will lapse unless you go to the expense of Supreme Court proceedings to extend the life of your caveat.