Financial restructurings are becoming increasingly common in the current financial climate, also in the Netherlands. Since the implementation of the Dutch scheme of arrangement on 1 January 2021, a relatively new tool to restructure debts of Dutch corporate entities in order to prevent their insolvency is available in the Netherlands. Under the Dutch scheme of arrangement, a creditors composition is binding on all creditors if a sufficient number of (classes of) creditors vote in favour of the scheme. In principle, the preferential order of priority for secured creditors, e.g.

In a recent case, the Victorian Supreme Court said that an accountant ‘would know well that a statutory demand involves strict time frames for response and potentially very significant consequences for a company’. The accountant failed to take appropriate steps to inform the company of the statutory demand.

The statutory demand process

If a company does not comply with a statutory demand within 21 days of service, it is deemed to be insolvent and the creditor may proceed to wind up the company.

A recent court decision considers the legal principles and sufficiency of evidence when a court-appointed receiver seeks approval of their remuneration.

A court-appointed receiver needs court approval for the payment of their remuneration. The receiver has the onus of establishing the reasonableness of the work performed and of the remuneration sought.

A Supreme Court in Australia has dismissed an application by a UK company’s moratorium restructuring practitioners for recognition of a UK moratorium and ordered that the company be wound up under Australian law.

The decision provides insights into the interaction between cross-border insolvencies and the winding up in Australia of foreign companies under Australian law.

Introduction

In the matter of Hydrodec Group Plc [2021] NSWSC 755, delivered 24 June 2021, the New South Wales Supreme Court:

It is possible for a trustee in bankruptcy to make a claim to property held by a bankrupt on trust. For example, by lodging a caveat over a home that is held on trust.

A trustee in bankruptcy may be able to make a claim, relying on the bankrupt’s right of indemnity as trustee of the trust. This is because the bankrupt’s right of indemnity, as trustee, is itself property that vests in the trustee in bankruptcy under the Bankruptcy Act 1966.

Explaining a trustee’s right of indemnity

The Act on confirmation of private restructuring plans (Wet homologatie onderhands akkoord) – which introduces a framework allowing debtors to restructure their debts outside formal insolvency proceedings (the “Dutch Scheme“) – was adopted by the Dutch Senate on 6 October 2020 and will enter into force on 1 January 2021.

A 139ZQ notice issued by the Official Receiver is a powerful tool for trustees in bankruptcy seeking to recover a benefit received by a third party from an alleged void transaction. These include transactions such as an unfair preference, an undervalued transaction, or a transaction to defeat creditors.

Given the adverse consequences for noncompliance, a recipient of a 139ZQ notice should take it seriously and obtain legal advice without delay.

Section 139ZQ notices

Section 561 of the Corporations Act 2001 (Cth) provides that accrued employee entitlements must be paid in priority to the holder of a circulating security interest in a winding up.

Until recently, it was unresolved whether the property subject to a circulating security interest should be determined as at the date the liquidation began, on a continuous basis, or at some other unidentified date.

It is unresolved whether a creditor can rely upon a section 553C set-off under the Corporations Act 2001 (Cth) to reduce an unfair preference claim. Until the controversy is resolved by a binding court decision, liquidators and creditors will continue to adopt opposing positions.

A company in liquidation served a creditor’s statutory demand for debt where there was a genuine dispute about the existence of the alleged debt. The statutory demand was set aside by the Court and the liquidators were ordered to personally pay costs on an indemnity basis.

What happened

In SJG Developments Pty Limited v NT Two Nominees Pty Limited (in liquidation) [2020] QSC 104: