Update on Liquidator remuneration post-Sakr1

Key points summary

Following the recent high-profile appeal decision2, the Supreme Court of New South Wales has now finalised the saga that was the review and approval of the remuneration of the Liquidator of Sakr Nominees.

From that decision emerge several key points for insolvency professionals when considering their remuneration:

OVERVIEW OF AUSTRALIAN CORPORATE INSOLVENCY REGIMES

Restructuring & Insolvency

Restructuring & Insolvency | i

Overview of Australian Corporate Insolvency Regimes

This document provides a summary of the most common Australian formal corporate insolvency regimes, namely:

voluntary administration;

receivership; and winding up.

It also covers creditors' schemes of arrangement which are increasingly being used in larger restructurings.

Boart Longyear – the recent appeal decision

Introduction

The concept of winding up does not exclusively apply to insolvent companies. Solvent companies can also be wound up, on the initiation of the company’s directors and shareholders (for example, as part of a corporate reconstruction or to close down non-operating or redundant entities).

An overview of the two key procedures to effect the dissolution of a solvent Australian company, being Members’ Voluntary Liquidation and Deregistration, is set out below.

The proposed schemes of arrangement for certain creditors of Boart Longyear Limited (BLY) - following very recent decisions in New South Wales at trial and now appellate level - are significant for restructuring and distressed investing professionals transacting in Australia. In particular, those decisions explore the principles for separation of affected creditors into classes, and highlight that different treatment of creditors in the same class does not of itself lead to division of those differently treated creditors into separate classes.

Contracts, agreements, arrangements and rights to which the stay on enforcing ipso facto clauses does not apply; final Regulations and Declaration published

The reform and its progress

Liquidators, administrators and receivers in Queensland are on notice that they may face serious personal consequences if they fail to cause companies to which they are appointed to comply with Environmental Protection Orders (EPOs).

Re Linc Energy Limited (In Liquidation) [2017] QSC 53 (13 April 2017) has determined that liquidators may not be able to escape obligations under an EPO by issuing a disclaimer notice.

Proposed exceptions to the stay on enforcing ipso facto clauses now published; public consultation open

The reform

From 1 July 2018, the moratorium on reliance by solvent counterparties on “ipso facto” clauses in voluntary administration, certain receiverships and creditors schemes of arrangement will come into effect (unless it is proclaimed to commence earlier, which is not presently expected).

Court of Appeal sets the record straight

The key point

On March 9, 2017, a full bench of the New South Wales Court of Appeal handed down a significant decision affecting approach to judicial review and approval of liquidator remuneration. Significantly, existing tension between decisions of different judges at first instance, and between NSW and Federal courts, has been resolved.

The Queensland Court of Appeal has unanimously allowed an appeal by the liquidators of Linc Energy Limited (Linc Energy), holding it was possible to use a disclaimer notice to avoid the consequences of an environmental protection order (EPO) issued under the Environmental Protection Act 1994 (Qld) (EPA).