In September 2023, the insolvency administrator of the insolvent Wirecard AG began reclaiming dividend distributions for 2017 and 2018 from shareholders. This is following a judgment of the Federal Court of Justice (BGH) in March 2023 (BGH judgment of March 30, 2023 – IX ZR 121/22). In that judgment the BGH ruled that in the event of a company’s insolvency, the insolvency administrator can demand back dividend payments made to shareholders for up to four years pursuant to section 134 (1) of the Insolvency Code (InsO).
The European Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114 – MiCA), which entered into force on 29 June 2023, is a significant new regulation that will impact the treatment of cryptocurrencies and digital assets. MiCA requires the European Securities and Markets Authority (ESMA) to develop a series of regulatory technical standards (RTS) and implement technical standards (ITS) and Guidelines. Many of these regulations are to be developed in close cooperation with the European Banking Association (EBA).
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The courts were busy in the second half of 2021 with developments in the space where insolvency law and environmental law overlap.
In Victoria, the Court of Appeal has affirmed the potential for a liquidator to be personally liable, and for there to be a prospective ground to block the disclaimer of contaminated land, where the liquidator has the benefit of a third-party indemnity for environmental exposures.1
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Australia's borders may be closed, but from the start of the pandemic, Australian courts have continued to grapple with insolvency issues from beyond our shores. Recent cases have expanded the recognition of international insolvency processes in Australia, whilst also highlighting that Australia's own insolvency regimes have application internationally.
Key takeaways
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With the courts about to consider a significant and long standing controversy in the law of unfair preferences, suppliers to financially distressed companies, and liquidators, should be aware that there have been recent significant shifts in the law about getting paid in hard times.
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Creditors commonly find that their applications to wind up a company are suddenly deferred at the last minute by the appointment of a voluntary administrator. Now, in the early days of the small business restructuring (Part 5.3B) process, the courts are already grappling with those circumstances in the context of that new regime. At the time of writing1, only four restructuring appointments under Part 5.3B have been notified to ASIC. Two of them have been the subject of court proceedings.
The resulting decisions reveal:
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The new small business insolvency reforms enacted by the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Cth) (Corporations Amendment Act) - which inserts a new Part 5.3B into the Corporations Act 2001 (Cth) (Corporations Act) - are due to come into effect on 1 January 2021.
In brief
The new small business insolvency reforms enacted by the Corporations Amendment (Corporate Insolvency Reforms) Act 2020 (Corporations Amendment Act) - which inserts a new Part 5.3B into the Corporations Act 2001 (Cth) (Corporations Act) - are due to come into effect on 1 January 2021.
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The Federal Court has ordered that an insolvency professional be appointed to act as a referee and to decide questions of insolvency in relation to a series of alleged unfair preferences, rather than have the judge undertake that task.
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