If Departmental activity, debate in Parliament and media articles are an indication, the Federal Government’s much awaited response to the Ripoll Report is imminent.
The High Court has further clarified the law regarding the effect of section 260-5 notices served by the Commissioner on third parties who are required to make payments to a company in liquidation.
The effect of the decision is that the Commissioner cannot issue such a notice after a company has gone into liquidation in order to give himself a priority over other creditors for payment of a tax debt. Such a notice is void.
The different types of insolvency
When a corporate tenant becomes insolvent, the landlord's rights depend upon the type of insolvency administration to which the tenant is subjected. Being familiar with the different options and the ways in which they are administered will enable property owners to act early and put themselves in the best possible position when faced with an insolvent (or potentially insolvent) tenant.
The three most common forms of insolvency administration which may affect corporate tenants are discussed below.
In a closely-watched case stemming from the demise of the Australian HIH insurance group, the UK House of Lords has ruled in McGrath & Anor & Others v Riddell and Others [2008] UKHL 21 that the English assets of four companies in that group, which are in liquidation in Australia and in ancillary insolvency proceedings in England, must be remitted to Australia for distribution under Australian insolvency law.
If an international airline that is a member of the International Air Transport Association (“IATA”) goes into insolvent external administration under the Australian Corporations Act 2001 (Cth) (the “Act”), will the IATA Clearing House Regulations (effective January 1, 2006) (the “CH Regulations”) continue to govern the relationship between IATA, the insolvent airline, and the other members of IATA? A recent judgment of Australia’s High Court clarifies these issues.
On 9 April 2018 Linc Energy Ltd (in liquidation) was convicted of causing serious environmental harm at its pilot underground coal gasification facility near Chinchilla, Queensland.
Administrators were appointed to the company on 15 April 2016. On 23 May they were appointed liquidators after creditors resolved that the company be wound up.
The Court will closely examine the relevant transactions involving the accounts and form a view – which may be an impressionistic one – as to the likely extent of the interest of each client (or each client group) in those accounts.
The updates to the Guidance Note provide useful guidance on disclosure requirements in the context of the safe harbour reforms but ultimately, the status quo continues.
The ASX has updated its continuous disclosure guidance for entities in financial distress to address uncertainty following the recent introduction of the insolvent trading safe harbour provisions into the Corporations Act. While the ASX has provided useful guidance, unsurprisingly, the position has not changed and directors must continually assess compliance with continuous disclosure requirements.
The High Court will consider the validity of “holding” deed of company arrangements (commonly known as “holding DOCAs”) under the Part 5.3A of the Corporations Act (theAct).