It goes without saying that it is important for an insolvency practitioner to be independent and to be seen to be independent when accepting an appointment or continuing to act in an existing appointment. The recent Federal Court decision of ASIC v Franklin [2014] FCA 68 provides some welcome guidance on what this means in practice and also on the contents of a declaration of independence, relevant relationships and indemnities (commonly known as a “DIRRI”).
FACTS
The two year transitional period under the Personal Property Securities Act 2009 (PPSA) ends on 31 January 2014. After this date, any remaining transitional security interests (TSIs) that have not been registered on the Personal Property Securities Register (PPSR) will no longer have their pre-PPSA priority, which could result in a secured party losing priority to other secured creditors or losing its interest in the secured property altogether if the grantor becomes bankrupt (if an individual) or is placed into administration or liquidation (if a company).
Two days before Christmas, the Supreme Court of New South Wales delivered a bonus for the general unsecured creditors of the collapsed discount giant Retail Adventures, and confirmed the requirements for deeds of company arrangement.
Deeds of Company Arrangement
The High Court has ruled that liquidators of lessors can disclaim leases, thus terminating the leasehold interests of tenants.
However, yesterday's High Court decision in Willmott Growers Group Inc. v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation) [2013] HCA 51 leaves open another issue: do liquidators need to get Court approval before exercising this power, and, if so, how easy or difficult would it be to get that approval?
Key Points
Key Points
The High Court in Willmott Growers Group1 has upheld a Victorian Court of Appeal decision that a lease can be disclaimed by the liquidator of a landlord. The decision will have very significant implications for tenants including:
A Deed of Company Arrangement (DOCA) is essentially the equivalent of a PIA for a corporation. However, a company must be in administration for a DOCA to be proposed.
In brief - High Court confirms that liquidators of landlord companies can disclaim leases, terminating lessees' rights
A Personal Insolvency Agreement, otherwise known as a PIA, is a flexible arrangement between debtors and their creditors. It involves a debtor putting forward a proposal as to how their financial affairs should be administered with a view to ensuring that creditors receive a dividend in respect of their debts.
A PIA will only come into operation if it has been accepted by a special resolution at a meeting of creditors – meaning a majority in numbers and at least 75% in value must vote in favour of the PIA.
In Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation) [2013] HCA 51, the High Court has confirmed that a liquidator of a landlord company has the power to disclaim a lease. The effect of the disclaimer is to terminate the leasehold interest of the lessee.
FACTS
A recent Federal Court of Australia decision has granted the Australian Commissioner of Taxation the right to recover, from a failed foreign company’s Australian assets, the pari passu amount the Commissioner would have been entitled to receive (on account of outstanding domestic tax and penalties) if he had been allowed to prove in the liquidation before the assets are remitted to the company’s foreign representatives (the liquidators).