Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (In Liquidation) [2013] HCA 51

Overview

Section 568 of the Corporations Act 2001 (Cth) (Act) gives liquidators broad powers to disclaim onerous property.

Until the High Court’s decision, it was unclear whether this power entitled a liquidator of an insolvent landlord to disclaim a lease, such that the solvent tenant no longer has any proprietary interest in the land.

The NSW Court of Appeal recently confirmed that the bankruptcy of a personal trustee or appointer of a family trust does not affect the protection afforded to the family trust assets by the trust structure. 

On 11 October 2013, the Trans-Tasman Proceedings regime will come into effect. The Trans-Tasman Proceedings Act 2010 aims to streamline the process for resolving Trans-Tasman civil proceedings, with the intention of reducing costs and improving efficiency in enforcing Australian judgments in New Zealand.

“A failure to respond to a statutory demand can have very serious consequences for a company. In particular, it may result in the company being placed in liquidation and control of the company passing to the liquidator of the company.”

What would you do if you saw the notice above in a box prominently displayed at the top of a document addressed to your company claiming that money is due and owing and specifying that you take urgent action within 21 days?

In its recent judgment of Morgan,In the matter of Brighton Hall Securities Pty Ltd (in liquidation) [2013] FCA 970, the Federal Court of Australia determined that a liquidator is entitled to retain certain remuneration and other expenses from the proceeds of a claim under a professional indemnity insurance policy in preference to claimants, who would otherwise have a statutory priority under section 562 of the Corporations Act.

BACKGROUND

Key Points:

For a company to be entitled to subrogation under section 560, it must ensure that it meets the strict requirements of section 560 and does not pay entitlements directly to the relevant company's employees.

In New Age Constructions (NSW) Pty Ltd v Etlis, in the matter of Etlis[2013] FCA 884, an unsecured creditor applied to set aside a Personal Insolvency Agreement (PIA)and also sought a sequestration order against the debtor’s estate.  The Federal Court considered whether the terms of the PIA were unreasonable or not calculated to benefit creditors generally.

The Tax Office (ATO) has received significant media attention recently and continues to feature regularly as an applicant in many of the ‘Winding Up’ proceedings before the Courts.  The majority of these proceedings are reflective of an aggressive strategy by the ATO to take strong action to recover outstanding debts.

In Lehman Brothers Australia Limited, in the matter of Lehman Brothers Australia Limited (in liquidation) (No 2) [2013] FCA 965, the Federal Court again confirmed that schemes of arrangement are a viable restructuring tool to compromise claims involving a class of creditors and third parties.

BACKGROUND

A recent decision of the Federal Court of Australia has found that the arrest of vessels pursuant to existing security rights, such as maritime liens under Australian admiralty legislation, have priority over cross-border insolvency applications under the UNCITRAL Model Law on Cross-Border Insolvency.

Introduction