In brief
One difficulty encountered by creditors and trustees in bankruptcy is the use of one or more aliases by a bankrupt. Whether it is an innocent use of a nickname or an attempt to conceal one's identity, the use of an alias can often create problems for creditors seeking to pursue debts and for trustees seeking to recover assets held by a bankrupt.
How does it happen?
In brief
Creditors commonly find that their applications to wind up a company are suddenly deferred at the last minute by the appointment of a voluntary administrator. Now, in the early days of the small business restructuring (Part 5.3B) process, the courts are already grappling with those circumstances in the context of that new regime. At the time of writing1, only four restructuring appointments under Part 5.3B have been notified to ASIC. Two of them have been the subject of court proceedings.
The resulting decisions reveal:
On 31 December 2020, the extension of the temporary relief measures introduced by the Federal Government on 22 March 2020 came to an end.
In their place, the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) (Act) and corresponding Regulations took effect on 1 January 2021. The Act provides for a debt restructuring process which will allow:
This week’s TGIF considers the decision of the Supreme Court of New South Wales In the matter of Gearhouse BSI Pty Ltd [2021] NSWSC 98. In this case, one of the joint venture parties obtained an order to wind up the joint venture on the basis that the underlying purpose of the business had failed.
Key takeaways
Externally-administered companies will have 24 months to comply with financial reporting and AGM obligations, if ASIC's proposal goes ahead.
ASIC relief defers obligations to lodge financial reports and hold annual general meetings for companies in external administration by 6 months. Companies in liquidation (other than AFS licensees) do not have to comply with financial reporting or AGM obligations at all.
This week’s TGIF considers an application to wind up a company on just and equitable grounds. The Court declined to make the order, finding the suggested deadlock had an air of artificiality and the application was infused with self-interest.
Key takeaways
On 1 January 2021, a number of changes to Australia’s insolvency framework came into effect, pursuant to the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) (the Act).
In brief
This week’s TGIF considers the decision of the Supreme Court In the matter of IW4U Pty Limited (In Liquidation) [2021] NSWSC 40, where the liquidators failed to recover compensation despite establishing contraventions of directors’ duties following an apparent phoenix.
Key takeaways