In the recent decision of Cant v Mad Brothers Earthmoving,[1] the Court of Appeal of the Supreme Court of Victoria (Justices Beach, McLeish and Hargrave) considered whether the liquidator of Eliana Construction and Developing Group (in liquidation) (Eliana) could establish that a payment made to an unsecured creditor of Eliana by one of Eliana’s related companies was an unfair preference.

The recent Federal Court decision of Scott v Southern Highlands Waste & Recycling Pty Ltd[1] provides liquidators with important guidance regarding the availability of search and seizure warrants under section 530C of the Corporations Act2001 (Cth) (the Corps Act).

The High Court refused to appoint an examiner to New Look Retailers (Ireland) Ltd (New Look), where it transpired that it had sufficient funds to survive for a number of months but had not engaged substantively with creditors before applying for the appointment of an examiner.

Background

New Look operates 27 stores in Ireland, all of which are rented. It closed its stores 2 days before the Government mandated lockdown in March.

In the recent Gunns decisions, the Federal Court considered three separate unfair preference claims brought by the liquidators of Gunns Limited (in Liquidation) (Gunns) against:

Late in the evening on 30 July, the last day before its summer break, the Irish parliament (Oireachtas) passed the Companies (Miscellaneous Provisions) (Covid-19) Bill 2020. This is likely to be signed into law and commenced within two weeks.

Three of its provisions are particularly relevant to insolvency processes during the COVID-19 crisis.

Creditors’ meetings

Whilst the power of a chairperson to exercise a casting vote at creditors’ meetings is a useful mechanism to resolve a deadlock in voting, it does not confer unconstrained discretion. The recent Glenfyne Appeal[1] provides valuable guidance as to the appropriate exercise of a casting vote and also serves as a reminder of the Court’s significant powers to review and reverse failed creditors’ resolutions due to the exercise of a casting vote.

The Office of the Director of Corporate Enforcement (ODCE) has provided guidance on its approach to directors of companies, made insolvent by the COVID-19 pandemic, who act in good faith on objective evidence in trying to rebuild their businesses.

The issue

The consequences of the COVID-19 crisis have made many businesses that were solvent, and will likely become solvent again, technically insolvent.

Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the hospitality sector where longer term challenges may be encountered due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer.

COVID-19 is an unexpected shock for many businesses. Some businesses are being significantly affected, particularly those in the travel and hospitality sectors. We consider some of the options open to otherwise good businesses facing cash-flow and other financial issues as a result of COVID-19.

How are governments dealing with COVID-19

We consider one case illustrating the efficiency of international insolvency proceedings commenced in Ireland, improvements to the efficiency of the appellate courts and one imminent legislative change, which will impose an administrative burden on the holders of security over book debts.

Ireland as an efficient venue for international insolvency