The Turnbull Government’s much-heralded ‘Innovation Statement’ was released yesterday. It contained wide-ranging statements on reforms aimed at fostering innovation across a number of sectors in the Australian economy.

One important reform area is in Australian corporate insolvency law.

Corporate insolvency law reform timetable

The Innovation Statement includes important content for the reform of Australia’s corporate insolvency laws. It is part of an ongoing reform exercise which has followed this timetable to date:

Taxpayers in Western Australia have been left to foot the bill after Jirsch Sutherland, liquidator for the Kimberley Diamond Company Pty Ltd (“KDC”), used a legal loophole to handball expensive mining leases back to the Department of Mines and Petroleum (“DMP”).

Care and maintenance costs for KDC’s Ellendale diamond mine amount to $100,000 (AUD) a month and environmental rehabilitation obligations are estimated to be $40 million (AUD). The DMP has been servicing these costs since KDC went into liquidation.

Today, by a majority of 3-2, the High Court of Australia in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2015] HCA 48 confirmed that s 254(1)(d) of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) does not impose an obligation on trustees (including administrators, receivers and liquidators) to retain sufficient moneys from the trust fund to pay tax unless a relevant assessment has been issued.

The Insolvency Law Reform Bill 2015 has been introduced into Parliament as part of the Australian Government's strategy to modernise and strengthen the nation's insolvency and corporate reorganisation framework.

This week’s TGIF considers a decision in which the Court held that an administrator who has unsuccessfully defended a proceeding may need to reinstate any remuneration previously received to satisfy the resultant costs order.

BACKGROUND

The deed administrator of a company subject to a Deed of Company Arrangement (DOCA) rejected proofs of debt submitted by a number of creditors.  The creditors successfully appealed against the rejection of the proofs of debt. 

Marsden v Screenmasters Australia provides guidance to liquidators who commence and continue proceedings, pursuant to funding arrangements, when met with arguments that the proceedings will not confer a benefit to creditors. 

WHAT HAPPENED?

This week’s TGIF considers the case of Bowesco Pty Ltd v Westpoint Management Ltd [2015] WASCA 184, which considered whether a guarantor had a right of subrogation enabling it to be repaid in advance of the second ranking creditor. 

BACKGROUND

The recent Full Court of the Federal Court of Australia decision of Templeton v Australian Securities and Investment Commission [2015] FCAFC 137 has considered the application of 'proportionality' in determining receivers' remuneration.

What do you do when a company owes you money? Or a creditor issues a statutory demand on your company?

This article discusses what a statutory demand is and the risks and benefits of issuing a statutory demand to recover your money.

In a recent decision of the High Court of Australia (which is the highest appellate court in Australia), a freezing order in respect of a prospective foreign judgment has been unanimously upheld.

This is a significant decision as the High Court has confirmed the validity of prospective freezing orders, a point previously the subject of some uncertainty in Australia, thereby greatly improving the position of parties seeking security in Australia in respect of foreign proceedings.

Background