1. What is insolvency?

Insolvency is defined in section 95A of the Corporations Act 2001 (Cth)(Act) as the inability of a company to pay its debts when they fall due. Australian law applies a cash-flow test rather than a balance-sheet test, meaning the inquiry does not turn on the numerical gap between assets and liabilities.

Introduction

What is insolvency?

Insolvency is defined in section 95A of the Corporations Act 2001 (Cth)(Act) as the inability of a company to pay its debts when they fall due. Australian law applies a cash-flow test rather than a balance-sheet test, meaning the inquiry does not turn on the numerical gap between assets and liabilities.

Key Takeaways

Commissioner of Taxation v Runcity [2025] FCAFC 152 is the most recent decision arising from litigation involving disqualified liquidator, David Iannuzzi. In previous decisions, Mr Iannuzzi was found to have mismanaged the liquidation of 23 companies and was banned from practising as a liquidator for ten years. Eight of those companies (Companies) were deregistered between 2015 and 2016.

In Otway (liquidator), in the matter of AMD Freight Pty Ltd (in liq) (No 2) [2025] FCA 1169 the Federal Court of Australia considered an application for termination of a winding up under the Corporations Act brought by the liquidators of AMD Freight Pty Limited (In Liquidation) (Compan

In March 2015 the major high street retailer British Home Stores (BHS) was acquired for £1 by Retail Acquisitions Limited (RAL), a company owned by Mr Dominic Chappell. Mr Chappell became a director of the BHS entities upon completion of the purchase, together with three other individuals.

In Mitchell and others v Al Jaber; Al Jaber and others v JJW Ltd [2024] EWCA Civ 423 the Court of Appeal has confirmed that a director remained subject to a continuing fiduciary duty post liquidation when purporting to transfer assets owned by that company, on the basis he was an “intermeddler”. While the case concerned a BVI company, the court’s decision was based on English-law authorities and therefore has wider significance.

Facts

In the recent case of Loveridge v Povey and Ors [2024] EWHC 329 (Ch) a company shareholder sought to challenge the administrators’ decision to rescue a balance sheet solvent company as a going concern by securing additional funding, as opposed to pursuing a sale of the business.

Background

McDermott restructuring plan approved amidst parallel settlement negotiations

The English court has given the green light to the restructuring plan (the Plan) proposed by CB&I UK Limited, part of the McDermott Group, marking the first such approval since the Court of Appeal’s pivotal decision in the Adler case (see our previous update).