On 31 August 2012, the Full Federal Court handed down its much awaited decision in Commissioner of Taxation v Kassem and Secatore [2012] FCAFC 124 which provides clarification regarding third party preference payments received by the ATO and the practice of the ATO appropriating payments made by taxpayers from one account (ie the integrated client account) to another (ie the superannuation guarantee account - SGER).
Summary
The main points to take away from this case are as follows:
On 19 September 2012, the Norton Rose Construction and Engineering team presented a breakfast briefing titled: “Financial Distress in Construction Projects: What happens when the wheels fall off?”
This briefing identified the warnings signs of insolvency, what steps parties can take to minimise exposure, how best to respond to a party’s insolvency and the options available to prevent insolvency in the first place.
The recent Supreme Court of Victoria decision in Re National Personnel Pty Ltd (in liquidation) [2012] VSC 508 confirms that the Court will take a broad approach in determining the true employer where the employer-employee relationship is confused and the liquidator is in doubt as to the identification of the employer.
Background
Who should bear the risk and ultimately the financial burden of insolvent wrongdoers when determining the liability of defendants to a plaintiff? The defendants, or the plaintiff?
The Law Commission revisits this question in an Issues Paper, published last week, after recommending in 1998 to retain the traditional position.1
A creditor with assets in England should refrain from involvement in a foreign insolvency proceeding if it is at risk of being sued in the foreign court.
Courts are willing, in certain circumstances, to consider the commercial realities of voluntary administrations, and can be flexible.
In Saraceni v Mentha [No.2] [2012] WASC 336 a director sought to challenge the appointment of receivers to Westgem Investments Pty Ltd ("Westgem") under a fixed and floating charge ("the Charge"). In 2008 Westgem entered into a Facility Agreement with financiers and executed the Charge, which charged the "secured property".
The plaintiff contended that:
Before the recent decision in Rubin and another v Eurofinance SA and others and New Cap Reinsurance Corporation (In liq) and another v AE Grant [2012] UKSC 46 (the joint appeal of two earlier cases) (the Rubin/New Cap Appeal), an insolvency judgment obtained in an Australian court could be enforced in the UK despite falling outside of the traditional common law enforceability rules.
The Rubin/New Cap Appeal has now removed this special treatment afforded to foreign insolvency judgments and the old common law rules once again apply.
Australian banks have historically relied on formal liquidation, voluntary administration and receivership processes available under the under the Corporations Act 2001 (Cth) and under general law where informal restructurings have failed. There has been little appetite for exploring alternative methods to exit distressed situations by debt trading.
On 1 December 2011 the Farm Debt Mediation Act 2011 (Vic) commenced operation. Under the Act, a farm debt mediation scheme is implemented which makes it compulsory for banks and other creditors to offer mediation to farmers before commencing debt recovery proceedings against the farmer on mortgages. Special Counsel, Jacqueline Browning discusses the scheme, which is about to mark its first anniversary of operation.
Key features
Some key features of the new Act (which in many ways mirrors similar legislation in NSW) are as follows: