On 7 May 2014, the High Court handed down its eagerly anticipated decision on the scope of the liquidator’s equitable lien in Stewart v Atco Controls Pty Ltd (In Liquidation) [2014] HCA 15.
I INTRODUCTION
The ultimate aim of the Bankruptcy Act 1996 (Cth) is to provide a fair and orderly process for the administration of the affairs of a debtor. In many circumstances the debtor may attempt to avoid his obligations to some or all of his creditors. The Bankruptcy Act recognises this and has long had provisions which empower trustees in bankruptcy to recover certain assets of a bankrupt. The two types of powers given to the trustee are where:
Key Points:
The NSW Supreme Court says it can provide directions on an administrator's commercial decision on the basis of the liability assumed by administrators and their partners.
As a business owner or company director, there are many elements you need to consider on a day to day basis to ensure your business runs smoothly. If you lease your premises it is important to understand your rights and what risks you face as a tenant.
The Court found that the appointment of voluntary administrators to a company constituted oppressive conduct under section 232 of the Corporations Act 2001 (Cth) in circumstances where it was part of a clear strategy by the controlling shareholder to gain control of the company’s business, to the exclusion of the minority shareholders. This case provides some useful observations on the operation of section 232, particularly around action by a parent company “of the affairs of” a subsidiary.
Central Cleaning Supplies (Aust) Pty Ltd v Elkerton [2014] VSC 61.
Appeal from liquidators’ decision to reject claim for the return of cleaning equipment subject to retention of title. Consideration of retention of title clauses and the application of the transitional security agreements under Personal Property Securities Act 2009 (Cth).
Impact of Apportionment
The High Court decision in Hunt & Hunt v. Mitchell Morgan Nominees Pty Ltd ((2013) HCA 10) highlights the impact of proportionate liability where it applies. In that case the High Court apportioned 87.5% of the liability to bankrupt fraudsters with only 12.5% of the liability being apportioned to the solicitors who had failed to protect the plaintiff from the fraud. Without the impact of apportionment Hunt & Hunt would have been liable severally for 100% of the loss.
If your terms of trade documents don’t have the correct provisions, you can lose goods supplied to a customer that becomes insolvent, even though you may have title to the goods.
A recent Supreme Court decision highlights the need for retention of title suppliers to have adequate terms of trade documents and to register security interests on the Personal Property Securities Register (PPSR) to avoid losing assets if a customer becomes insolvent.
In DSG Holdings Australia Pty Ltd v Helenic Pty Ltd [2014] NSWCA 96, the Court of Appeal considered the meaning of the “interests of the creditors as a whole” under section 600A of the Corporations Actand the circumstances in which the Court will intervene to set aside or impose conditions on resolutions passed at creditors meetings.
BACKGROUND