Can a builder that is in liquidation take advantage of the security of payment regime? Not according to a 2016 decision of the Court of Appeal in Victoria, but last month the NSW Court of Appeal reached a different conclusion. In our latest Corrs High Vis podcast, Samuel Woff and Ryan Shlah sit down with presenter Wayne Jocic to discuss the two cases, and the approach taken by each Court.

There is now a divergence between New South Wales and Victorian authority on whether a company in liquidation may make a claim under Security of Payment legislation. The common law position in NSW is now that a company in liquidation can bring a Security of Payment claim. This decision will be rendered somewhat academic in NSW following enactment of legislation to come into force on a (currently unspecified) date in 2019 which has the effect of overriding this decision.

King (Trustee); In the matter of Zetta Jet Pte Ltd v Linkage Access Limited [2018] FCA 1979 is the latest in a series of decisions, across multiple proceedings, dealing with the dogged attempts of a United States bankruptcy trustee to recover a luxury yacht moored in Australian waters.

In this week’s TGIF, we consider the dangers of being the last one standing in ‘mothership’ preference claims. In the recent decision of In the matter of Bias Boating Pty Limited (receivers and managers appointed) (in liquidation) [2019] NSWSC 47, Black J ordered costs against a number of defendants to a preliminary question of insolvency even though they did not participate in the hearing of that question.

Position of creditors

Forms of security

What are the main forms of security over moveable and immoveable property and how are they given legal effect?

There are two main types of security:

The federal government has recently introduced reforms to Australia’s insolvency and restructuring laws to provide companies under financial stress an opportunity to trade out of their difficulty. A key part of the reform package is the introduction of a new “ipso facto” regime, which restricts the ability of a party to terminate a contract and exercise other contractual rights in certain cases of insolvency or restructuring of the other party.

What are ipso facto clauses?

This week’s TGIF considers a recent decision of the Victorian Court of Appeal where a company’s creditors successfully opposed an application by the company’s liquidators to compromise proceedings commenced on the company’s behalf.

ASIC’s record with land banking schemes has been the story of shutting the stable door after the horse has bolted. It has wound up insolvent schemes long after the investor’s cash has well and truly dissipated.

For example:

This week’s TGIF considers a recent Federal Court decision which validated dispositions of property made by a company after the winding up began.

WHAT HAPPENED?

On 8 May 2017, Bond J ordered that a coal exploration company (the Company) be wound up on just and equitable grounds following a shareholder oppression claim. So as to avoid the consequences of a liquidation, his Honour immediately stayed that order for a period of 7 days to enable the warring parties a final chance to resolve their differences.

Insolvency – every director’s biggest nightmare. Under the Corporations Act s 459C, when a creditor serves a statutory demand on a company for an outstanding debt, the company will be presumed insolvent if it fails to comply with, or set aside, the demand. But what happens when the creditor is also a director of the company? This was an issue recently considered by the Supreme Court of Queensland in Re CSSC (QLD) Pty Ltd [2018] QSC 282.

The facts