It is quite a thing for the law to remove from owners the rights normally associated with ownership and to confer them on receivers. 

Which is why, although receivers are allowed considerable discretion in the exercise of their duties, they are also subject to oversight by the courts.

So how much freedom of manoeuvre do they have, and when will the court intervene?  We look at a recent decision¹  in the Australian Federal Court and consider its relevance for New Zealand insolvency practitioners.

Upon appointment, a liquidator will generally exercise control of as much of the company’s property as is available, so that it can be realised for the benefit of creditors.  However, in some cases, a liquidator may not wish to retain certain property if it is unlikely that such property will provide a return to the liquidation.

The importance of notifications to potential defendants and directors of the insolvent company

The decision in Re Octaviar Administration Pty Ltd (in liq) [2013] NSWSC 786 highlights two key issues for insolvency practitioners:

The Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013 (Regulations) to amend the structure of UK annual reports have been published and laid before Parliament.

The Personal Property Securities Act 2009 (Cth) (PPSA) came into effect on 30 January 2012 and has introduced major changes for businesses that lease or hire personal property. If you lease or hire personal property it is vital that you understand how the PPSA affects your business, including what additional steps you need to take to protect your property and the consequences for not doing so, especially as the PPSA’s transitional provisions will end shortly.

What does the PPSA mean for your business?

The recent Australian Federal Court case of Neeat Holdings (in liq) [2013] FCA 61 considered the issue of whether the liquidator of a trustee company should be permitted to sell trust assets notwithstanding the appointment of a new trustee in substitution for the insolvent trustee company.

In Saraceni v ASIC [2013] FCAFC 42 the Full Court of the Federal Court of Australia confirmed that it is not necessary for ASIC to provide potential examinees with an opportunity to be heard prior to authorising receivers to conduct examinations under s596A of the Corporations Act.

FACTS

Later this year the High Court will hear an appeal from the decision of the Victorian Court of Appeal in Re Willmott Forests Limited (Receivers and Managers appointed) (in liquidation) [2012] VSCA 202.

The decisions of the Court of Appeal and the trial judge were considered in our earlier alert that can be accessed by clicking here.

On the occurrence of bankruptcy, the trustee must take immediate possession or control of the bankrupt’s property, as that property is now “available” to the trustee for the benefit of creditors generally and vests in the trustee for that purpose.  However, a bankrupt may not always co-operate with his or her trustee and will often refuse to deliver up property to the trustee or even allow the trustee on to the premises where the property is held.

A relevant example

There is a plethora of Australian legislation which sheets home personal liability to directors and officers.

Below are some reminders of traps for directors and officers for transactions that might be undertaken in the usual course of a director or officer’s normal arrangements.

Trap 1: Super re-contribution

Some advisors propose, as a strategy for limiting superannuation death benefits tax, withdrawing superannuation balances and re-contributing that amount into super as a non-concessional tax-free contribution.