For some time now, there has been uncertainty in Australian insolvency law about whether or not insolvency practitioners should apply the statutory priority regimes established by sections 433, 566 and 561 of the Corporations Act 2001 (Cth) when distributing the assets of a “trading trust”. The decision of the New South Wales Supreme Court in Re Independent Contractor Services (Aust) Pty Ltd (In liq) [No 2] (2016) 305 FLR 222, and the myriad of cases that followed it, suggested that the answer was “no”.

The Government has now announced its intention to proceed with the introduction of a bill to establish a farm debt mediation scheme, based in many respects on comparable New South Wales legislation. It is important for secured lenders to farming enterprises to consider in advance the implications of the bill and the necessary changes to product design, documentation, client relationship management and enforcement processes which may be required.

The scheme is intended to provide for fair, equitable and timely resolution of farm debt issues with two key objectives:

This week’s TGIF considers the decision of AIG Australia Limited v Kaboko Mining Limited [2019] FCAFC 96, in which the Full Federal Court found that an insolvency exclusion in a D&O policy did not apply to exclude claims brought against directors and officers of a company under external administration.

What happened?

In its much anticipated decision, the High Court has unanimously dismissed the Amerind appeal.[1] This decision finally resolves recent uncertainty as to the proper application of trust assets in the liquidation of an insolvent corporate trustee.

In short, the High Court’s decision confirms that in the winding up of a corporate trustee:

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.

On 27 March 2019, the Federal Court of Australia delivered an important decision demonstrating the Court's willingness to assist liquidators to streamline the procedural aspects of liquidations using technology with the aim of conserving assets for the benefit of creditors.

The introduction of a safe harbour protection for company directors was one of a number of generational reforms to the restructuring landscape throughout late 2017 and 2018 aimed at relaxing Australia’s unforgiving insolvency laws.

Now that more than a year has passed, have the safe harbour reforms been a success? And what steps can directors take to ensure they obtain the protections they afford?

The requirement for strict technical compliance with notice provisions has been extended beyond guarantees, particularly where there is some immediate and material consequence that flows from the notice being issued.

This week’s TGIF considers the recent case of Halifax Investment Services Pty Ltd (In liquidation) (No 4) [2019] FCA 604 where the Federal Court granted an application by liquidators of a company to electronically publish notices required to be sent to creditors as part of their initial reporting obligations in a winding up, to save costs and time, in cir

The NSW Supreme Court has reaffirmed the criteria for a Court to inquire into a liquidator’s conduct. It is necessary to show that there is at least a ‘well-based suspicion’ indicating a need for further investigation. ‘Mere wondering’ is not enough.

In exercising its discretion, a Court will also consider the nature and gravity of the allegations against the liquidator, delays in seeking an inquiry, the utility of an inquiry and the existence of alternative remedies.

Background