Protecting Creditors - Voiding Transactions using section 37A of the Conveyancing Act 1919 (NSW)

While most Australians enter construction contracts with no issues whatsoever, there remain instances in which builders take advantage of consumers. For instance, we draw attention to the example of Tevita and Siosiana Ungounga’s (“the Ungoungas”) and theircompany, T & T Sandstone Construction Pty Ltd (“T & T Sandstone”), recently published by NSW Fair Trading.

In ACN 004 410 833 Ltd (formerly Arrium Limited) (in liq) v Michael Thomas Walton [2020] NSWCA 157, the NSW Court of Appeal clarified the scope of examination and production orders for investigative purposes in a potential shareholder class actions.

The case concerned shareholders of Arrium seeking to utilise the examination process under the Corporations Act 2001 (Cth) to effectively determine the viability of possible claims that could be brought against Arrium Ltd (in liq) (Arrium), its directors and auditor.

The decision in Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28

The decision in Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28

It is a concern for directors in charge of companies experiencing financial difficulty that they may fall foul of the provisions under the Corporations Act 2001 (Cth) regarding a director’s duty to prevent insolvent trading by a company.

Insolvency proceedings can often be a very chaotic and drawn out process. Amidst the flurry of activity undertaken by creditors, liquidators and directors, a question to consider is what happens when we throw an insurer’s rights of subrogation into the mix.

Subrogation

Subrogation is the act of one party (normally an insurer) having standing to prosecute a cause of action in the name of another, where the former has reimbursed the latter for losses.

In CGU Insurance Limited v Blakeley [2016] HCA 2 previously summarised by William Roberts earlier this year the High Court of Australia found that a potential plaintiff can pursue a claim against an insolvent company’s insurer under that company’s insurance policy.

The recent decision of the Federal Court of Australia in Australian Securities and Investments Commission v Sino Australia Oil and Gas Limited (prov liq apptd) [2016] FCA 42 serves as a timely reminder to insolvency practitioners to confirm that their appointment as voluntary administrators has been validly made in accordance with section 436A of the Corporations Act 2001 (Cth) (the Act).

Facts

The Bankruptcy Act 1966 (Cth) specifies the circumstances in which a bankrupt is entitled to continue prosecuting legal proceedings after a sequestration order has been made.  Sections 60 and 116 of the Act allow a bankrupt to continue with their proceedings if the proceedings are “in respect of any personal injury or wrong done to” the bankrupt.