In June we published our JMAlert that outlined how ipso facto reforms will affect commercial contracts entered into after 30 June 2018, click here to view the article.

Voidable transactions When a company becomes insolvent, sections 588FA and 588FB of the Corporations Act 2001 (Cth) (Corporations Act) empower liquidators to investigate voidable transactions, including unfair preference and uncommercial transactions as well as unreasonable director-related transactions.

The facts  

The Plaintiffs were appointed joint and several liquidators to three separate companies (“Companies”) which were being wound up in insolvency.  

The three companies had previously traded in partnership (“Partnership”) in an accounting practice.  

There has been some recent discussion around the use by insolvency practitioners of the security of payment legislation. The benefits of engaging this process are obvious – there is an opportunity to secure payment for the insolvent company in a quick and cost efficient manner while also avoiding the financial burden of a security for costs order which the insolvent company (and hence insolvency practitioner) is likely to face in court proceedings.  

Summary

The Hon Joe Hockey announced the final terms of reference for a new financial system inquiry on 20 December 2013.  The purpose is to examine how the financial system could be best positioned to meet Australia's evolving needs and support Australia's economic growth.

An interim report was released on 15 July 2014.  Section 3 discusses potential changes to the current external administration regime in Australia. 

The Supreme Court of Western Australia has recently held that a creditor’s claim against a guarantor was extinguished some years earlier, under the guarantor’s deed of company arrangement (DOCA).

The reasoning behind Le Miere J’s decision in Australian Gypsum Industries Pty Ltd v Dalesun Holding Pty Ltd is that a DOCA extinguishes future liabilities arising under an agreement made prior to the execution of the DOCA. This includes those arising under pre-existing guarantees.