This week’s TGIF considers the case of In the matter of Specialist Australian Security Group Pty Ltd (in liq) [2018] VSC 199 in which the Court considered the priority of administrators' right to an indemnity out of company property.

Background

This week’s TGIF considers Gogetta Equipment Funding Pty Ltd v Mark & Liz Pty Ltd [2018] VSC 91, which examined a priority contest between competing equitable interests in property.

What happened?

HM Revenue & Customs (“HMRC”) has issued a consultation entitled “Tax Abuse and Insolvency: A Discussion Document” on how it proposes to confront those who misuse insolvency law as a means of avoiding or evading their tax liabilities.

In the recent case of Cash Generator Limited v Fortune and others [2018] EWHC 674 (Ch), the Court determined that non-compliance with the deemed consent procedure for nominating liquidators did not invalidate their appointment. The case provides a useful summary on the relatively new provisions governing the deemed consent procedure and welcome relief to Insolvency Practitioners (“IPs”) that a failure to fully comply with such provisions will not necessarily invalidate their appointment.

Brief facts and arguments

This week’s TGIF considers the case ofIn the matter of Bean and Sprout Pty Ltd [2018] NSWSC 351, an application seeking a declaration as to the validity of the appointment of a voluntary administrator.

What happened?

On 7 December 2018, Mr Kong Yao Chin (Chin) was purportedly appointed as the voluntary administrator of Bean and Sprout Pty Ltd (Company) by a resolution of the Company.

This week’s TGIF is the second of a two-part series considering Commonwealth v Byrnes [2018] VSCA 41, the Victorian Court of Appeal’s decision on appeal from last year’s Re Amerind decision about the insolvency of corporate trustees.

This week’s TGIF is the first of a two-part series considering Commonwealth v Byrnes [2018] VSCA 41, the Victorian Court of Appeal’s decision on appeal from last year’s Re Amerind decision about the insolvency of corporate trustees.

This first part looks closely at what the Court of Appeal did – and did not – decide in relation to how receivers and liquidators should deal with property recovered pursuant to an insolvent corporate trustee’s right of indemnity.

A recent decision of the High Court (Goel and another v Grant and another [2017] EWHC 2688 (Ch)) has provided a useful reminder that care must be taken when administrators enter into pre-contract negotiations and the risk of inadvertently entering into a binding contract before terms are finalised. It also deals with the risks of disposing of assets, even those that are difficult to value, without due process.

The Facts

Remuneration schemes involving Employee Benefit Trusts (EBTs) have become more prevalent over the last 20 years, often as a way of seeking to remunerate key employees without making pay as you earn or national insurance contributions. Given the developments highlighted below, insolvency practitioners are advised to investigate such schemes in matters coming across their desks to see whether funds can be clawed back for the benefit of creditors.

HM Revenue and Customs’ opinion on EBT schemes

This week’s TGIF considers In re City Pacific Limited in which the NSW Supreme Court considered whether to approve a liquidator entering into a litigation funding agreement under which the funder would receive a premium of at least 50% of any judgment or settlement achieved.

WHAT HAPPENED?

In late 2009, two related companies were wound up and the same liquidator was appointed. The liquidator instituted two proceedings in the NSW Supreme Court: