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

Summary

This decision is a testament to the flexibility of schemes of arrangement in Australia as a means of effecting settlements with a company’s creditors as well as third parties such as the company’s insurers. The Federal Court also demonstrated its propensity to take a liberal interpretation of what constitutes a “compromise or arrangement” to enliven its jurisdiction to convene a meeting of creditors for the purpose of considering a proposed scheme of arrangement.

Section 560 of the Corporations Act provides that a person who loans money to a company in liquidation, for the purposes of making a payment towards employee wages and other employee benefits, will have the same right of priority as the employees would have had in the winding up of the company.

The spate of insolvencies in the NSW construction sector shows no signs of easing. On 24 October 2013, the Building and Construction Industry Security of Payment Act Amendment Bill 2013 was introduced into Parliament. The Bill is part of the government’s broader reform package to address the level of insolvency being experienced in the NSW construction sector.

Partner, Michael Lhuede and Senior Associate, Ben Hartley discuss the recent Federal Court decision of AMWU v Beynon that dealt with directors’ personal liability for the payment of employee entitlements.

Introduction

Insolvency practitioners need to be aware of the potential for incurring personal liability under civil penalty provisions for contraventions of the Fair Work Act and how they can protect themselves from claims when accepting appointments.

General corporate

ASIC reports on corporate insolvencies 2012–2013

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?