Key Points:

There are three things prudent insolvency practitioners can do when left with non-company assets.

A not too infrequent issue for insolvency practitioners: what can you do with unclaimed assets of third parties? Clayton Utz recently acted for the receivers and managers of Arcabi Pty Ltd (In Liquidation) (Receivers and Managers Appointed) (known as “The Rare Coin Company”) and developed a strategy to deal with the issue.

Background

The period for submissions on wide-ranging reforms to the NSW construction industry recommended by the Independent Inquiry into Construction Industry Insolvency in NSW is closing soon.

Few now remember that Chapter 5C of the Corporations Act can trace its origins to the afternoon of 23 July 1991. For the past year, the unlisted property trust industry had been in meltdown. The value of the assets held by the industry had fallen over 20%. Investors were scrambling to get out, and collapses seemed imminent.

Where it appears that there has been concealment or removal of valuable assets and little to no co-operation from the directors in the course of a liquidation, the section 530C warrant procedure in the Corporations Act 2001 (Cth) has proven to be an effective means of obtaining information regarding company books and assets.

The COVID-19 pandemic and the associated lock downs have led to a global economic slowdown, and Australia has been no exception. GDP fell by 0.3% in the March quarter, and on 3 June 2020 Treasurer Josh Frydenberg announced that Australia was officially in its first recession in 29 years.

While the Australian Government was quick to provide a range of economic support measures – having already spent $289bn or 14.6% of GDP in an attempt to keep the economy afloat – Treasury expects Australia's GDP will decline by 0.5% in 2019-20 and a further 2.5% in 2020-21.

The decision in the Go Energy Group is an important one for insolvency practitioners, who now have guidance on how to manage the conflicts that can arise when acting as liquidator to multiple companies within a corporate group.

The new ipso facto regime applies to all contracts to be entered into on or after 1 July 2018. Businesses should now be carefully reviewing the effect of that regime on their contracts and whether any of their contracts may be exempt under the Corporations Amendment (Stay on Enforcing Certain Rights) Regulations 2018 published on 24 June 2018.

The types of contracts excluded from the new ipso facto stay

Agencies need to get ready for ipso facto reform by making changes to their contracts, funding agreements and contract administration practices.

Australian Government Agencies face constraints on their ability to terminate agreements where a contractor has entered into voluntary administration or certain other forms of insolvency procedure. The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Act, which amends the Corporations Act 2001 (Cth):

Key Points:

Companies that have leasing as a small and irregular part of their overall business still must comply with the PPSA if their interests in leased goods are to be protected.

Key Points:

This case presented a difficult and unique set of circumstances for the court to navigate while the scheme clock was ticking.

The recent approval of the David Jones scheme of arrangement demonstrates how, in the absence of shareholder opposition, the inexorability of a scheme timetable can cause problems for a court when there is a major development after the first court hearing.