The Federal Court declined to approve a creditors' scheme of arrangement by Twinza Oil Limited (Twinza). The scheme, supported by all scheme creditors, proceeded on the assumption that the ordinary and preference shares were worthless.

Key takeouts

High Court upholds decision that separate entities of foreign states may be immune from being wound up in Australia

Key takeouts

Two recent cases from New Zealand demonstrate how an equitable lien can arise in insolvency to elevate the interest of unsecured purchasers of goods to secured status.

Key takeouts

On 22 Sept 2023, the Australian government responded to the Whittaker Review, releasing the Personal Property Securities Amendment Bill 2023 for public consultation until 17 Nov 2023.

Overview of the Whittaker review and Government's response

The U.S. Court of Appeals for the Sixth Circuit recently ruled in a case involving a Chapter 13 debtors’ attempt to shield contributions to a 401(k) retirement account from “projected disposable income,” therefore making such amounts inaccessible to the debtors’ creditors.^[1] For the reasons explained below, the Sixth Circuit rejected the debtors’ arguments.

Case Background

A statute must be interpreted and enforced as written, regardless, according to the U.S. Court of Appeals for the Sixth Circuit, “of whether a court likes the results of that application in a particular case.” That legal maxim guided the Sixth Circuit’s reasoning in a recent decision^[1] in a case involving a Chapter 13 debtor’s repeated filings and requests for dismissal of his bankruptcy cases in order to avoid foreclosure of his home.

On January 14, 2021, the U.S. Supreme Court decided City of Chicago, Illinois v. Fulton (Case No. 19-357, Jan. 14, 2021), a case which examined whether merely retaining estate property after a bankruptcy filing violates the automatic stay provided for by §362(a) of the Bankruptcy Code. The Court overruled the bankruptcy court and U.S. Court of Appeals for the Seventh Circuit in deciding that mere retention of property does not violate the automatic stay.

Case Background

When an individual files a Chapter 7 bankruptcy case, the debtor’s non-exempt assets become property of the estate that is used to pay creditors. “Property of the estate” is a defined term under the Bankruptcy Code, so a disputed question in many cases is: What assets are, in fact, available to creditors?

Australia's largest corporate insolvency reform in 30 years is set to be introduced at the beginning of 2021. Draft legislation, which applies to small businesses, was released last week. Organisations need to familiarise themselves with the information ahead of an anticipated wave of insolvencies in 2021, as COVID-19 related government incentives cease.

Key takeouts

Once a Chapter 7 debtor receives a discharge of personal debts, creditors are enjoined from taking action to collect, recover, or offset such debts. However, unlike personal debts, liens held by secured creditors “ride through” bankruptcy. The underlying debt secured by the lien may be extinguished, but as long as the lien is valid it survives the bankruptcy.