The "running account" defence to an unfair preference claim is a fragile flower.  In a recent decision, the Queensland Court of Appeal has reminded solvent counterparties that suspension of a customer's trading account will probably break the "running account", exposing a solvent counterparty to greater unfair preference risk.

Need to know

Mango Boulevard Pty Ltd & Anor v Whitton & Ors [2015] FCA 1169

A bankruptcy trustee’s notice objecting to discharge on one of the special grounds specified in the Bankruptcy Act 1966 can be valid even if based on additional unstated reasons, so long as those reasons are directed to the achievement of a purpose of the law of bankruptcy.

Key Points:

It's unclear that safe harbours by themselves will provide genuine opportunities for restructuring distressed businesses.

The Productivity Commission's upcoming report on corporate insolvency will address two burning issues: ipso facto clauses and how to encourage directors to save financially-stressed companies.

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

Before commencing winding up proceedings against a debtor company, it is very common for a creditor to serve a creditor's statutory demand for payment of a debt ("statutory demand"). After spending time and effort preparing a statutory demand, it is crucial that the statutory demand is served properly on the debtor company. If it is not served properly, the statutory demand may be set aside and cost you money.

In a previous article, we addressed some of the pitfalls of drafting subpoenas and provided some tips and tricks for the drafting of subpoenas (see “The Pitfalls of Subpoenas”). Since that article, the NSW Court of Appeal has addressed the issue again with a timely warning to insurers that improperly drafted subpoenas will be set aside, in whole or in part.

Introduction

The Full Court of the Federal Court has given some important guidance on the calculation of remuneration for court appointed receivers.  In its decision in Templeton v Australian Securities and Investment Commission the Court has highlighted the importance of proportionality in determining reasonable remuneration.

General Position