In Re Intellicomms Pty Ltd (in liq) [2022] VSC 228, it was determined that a sale agreement was a creditor-defeating disposition within the meaning of section 588FDB of the Corporations Act 2001 (Cth) (Act) and voidable pursuant to section 588FE(6B) of the Act.

This week’s TGIF considers Arnautovic v Qaqour [2022] FCA 726 in which the Federal Court of Australia ordered a director of a company in liquidation to surrender his passport and prohibited him from travelling outside of NSW without the Court’s prior consent.

Key takeaways

In a recent article, we analysed the Court’s powers to summon a person for examination under sections 596A and 596B of the Corporations Act 2001 (Cth).  Those powers may be used by an eligible applicant to gather information from an officer, provisional liquidator or other person about the examinable affairs of an externally-administered corporation.

On 31 May 2022, the Australian Financial and Security Authority (AFSA) announced a new proposed vulnerability framework to assist businesses who are the most vulnerable within the insolvency framework. This is even more important in the wake of the COVID-19 pandemic, with many businesses facing financial distress for the first time. Those businesses may be unsure how to navigate the system and what options are available to them. AFSA’s proposed vulnerability framework plans to address these concerns.

Background to the new framework

Facts

In April 2015, administrators were appointed to several companies within the NewSat Group. Secured lenders appointed receivers who attempted, unsuccessfully, to restructure the business. Following this, the group was placed into liquidation.

In a recent decision of the Federal Court of Australia (Sino Group International Limited v Toddler Kindy Gymbaroo Pty Ltd [2022] FCA 630), administrators were held to have validly admitted a $5 million claim for a nominal value of one dollar.

The case is a timely reminder of the importance of appropriately evidencing debts, particularly for the purposes of creditors meetings to determine next steps.

Key takeaways

A prohibition order in place on a development in Hassall Street, Parramatta, NSW, serves as a useful reminder for developers, builders and financiers of the importance of complying with the requirements of the Design and Building Practitioners Act 2020 (NSW) (DBP Act) and the Residential Apartment Buildings (Compliance and Enforcement Powers) Act 2020 (NSW) (RAB Act) (together, the Acts) (and the consequences of non-compliance).

In its recent judgment in Re Jabiru[1], the Supreme Court of New South Wales applied principles governing the appointment of Special Purpose Liquidators (SPL) in rejecting the Plaintiffs’ application for a SPL to be appointed to pursue claims against secured lenders.

There is growing concern in business news and media about the increase in insolvency appointments. Many experts are warning that the country is going to see a significant rise in insolvencies following the pandemic.

What’s the cause?

Re Intellicomms Pty Ltd (in liq) [2022] VSC 228

The proceeding was brought by the liquidators of Intellicomms Pty Ltd (the Company) seeking relief in relation to a Sale Agreement dated 2021 between the Company and the defendant, Tecnologie Fluenti Pty Ltd (the Purchaser), involving the sale of certain business assets of the Company to the Purchaser.