In the latest decision in the long running Pugachevdispute, the High Court considered the effect of five trusts set up by Mr Pugachev, and whether the trusts were shams. Birss J held that he would have been prepared to declare the five trusts shams, but on the true interpretation of the trust documents and considering the powers reserved to Mr Pugachev as protector, all five trusts were, in effect, bare trusts for the benefit of Mr Pugachev.
In New Zealand, a court may appoint a liquidator to a company if, among other reasons, it is satisfied that the company is unable to pay its debts.[1] Unlike other jurisdictions, that assessment is focused only on cashflow, rather than balance sheet, insolvency.
Despite initial uncertainty, the Insolvency Practitioners Bill has been picked up by the new government. It will be amended by Supplementary Order Paper.
That SOP is yet to be released. Whether the amendments follow the direction agreed by the former Cabinet remains to be seen.
The Bill is on the Order paper under the name of new Commerce Minister Kris Faafoi. Chapman Tripp has been advised by the Leader of the House that Faafoi is awaiting advice from officials on “possible amendments”.
Liquidators cannot examine directors to obtain private financial information on which to judge their worth as prospective defendants.
This position was reinforced by the Court of Appeal in a recent decision.
The decision of the English High Court in Willmont and Finch v Shlosberg clarifies how insolvency practitioners can use and disclose documents obtained under compulsion or litigation to related insolvency estates.
Ms P was on her way to bankruptcy. Mr W, a friend and adviser, helped her to gift funds from an inheritance to a family trust. Mr W moved the funds around his own accounts (including his family trust account and business accounts). Ms P was then adjudicated bankrupt.
In Re Willis, Eileen Willis (Anne) applied to annul a bankruptcy order made against her on the application of her former husband, Leslie Willis.
In McCollum v Thompson, the Court of Appeal partly quashed the orders of the High Court (previously reported in our March 2016 insolvency update).
The director and shareholders of Rayland Investment Ltd (in liq) (the Company) applied to terminate the Company's liquidation. The Court found it appropriate to make that order. At issue, however, was the remuneration claimed by Mr Norrie, the Company's liquidator, which the Court reduced from $39,128 to $15,559.
Mr Norrie was not entitled to remuneration for unnecessary preliminary steps such as consenting to appointment by affidavit and carrying out property searches.
Arena Capital Limited (Arena) was a Ponzi scheme. Arena's liquidators applied under s284(1)(a) of the Companies Act 1993 for directions regarding the distribution of assets under liquidation.
The Court held that dividing the assets into trust assets and general assets was inefficient in the circumstances and ordered a "common pool approach." The Court ordered distribution on a pro rata, pari passu basis. The investors had borne the same degree of risk and it was not cost-effective to trace the numerous small contributions.