The Supreme Court of New South Wales has clarified the circumstances in which a liquidator may recover deposit funds paid to a third party and the extent to which a counterparty may rely on the good-faith defence under section 588FG of the Corporations Act 2001 (Cth).

When state legislatures consider a legislative bill, it’s important that they hear from stakeholders who would be affected by that bill.

Important ABC Stakeholders

When faced with a legislative bill on assignment for benefit of creditors (“ABC”), its important that legislatures hear from a variety of stakeholders, including this important group:

Recently, the U.S. Supreme Court denied certiorari in two cases involving bankruptcy questions:

An assignment for benefit of creditors (an “ABC”) under the common law is an out-of-court tool for liquidating a business debtor’s assets in an efficient and credible manner.

Such a common law tool has been used, effectively and frequently, for many years in such states as Illinois and California.

Despite the out-of-court nature of an ABC under the common law, courts can still be enlisted to resolve discrete issues that may arise. Here is an example of a court’s involvement, within an ABC under the common law, to resolve an issue of compensation for the ABC assignee:

Here’s a curious thing:

• an advisory opinion from a U.S. Circuit Court of Appeals on an issue for which there is no controversy and that is mostly academic.

That’s exactly what we have in In re Whittaker Clark & Daniels, Inc., Case Nos. 24-2210 & 24-2211 (3rd Cir., decided September 10, 2025)(see first concurring opinion).##

No Controversy

Assignments for benefit of creditors (“ABCs”) and receiverships have been utilized effectively for centuries under the common law, side-by-side as separate and distinct and complementary remedies for liquidating assets.

Differences

Differences between the two are that:

In Yeo (liquidator), in the matter of Tuftex Carpets Pty Ltd (in liquidation) [2025] FCA 1200 the liquidators sought approval from the court to enter into a settlement agreement. The claims underlying the settlement agreement were against the former director and parent company for insolvent trading and the resulting loss.

Key Takeaways

In Re Resource Development Group Limited (Administrators Appointed) [2025] WASC 408, the Court granted relief to the voluntary administrators of Resource Development Group Ltd (RDG) from personal liability under a loan arrangement and extended time for the registration of a related security interest.  

Key Takeaway

In Re Bayview Health – Matilda Bay Pharmacy Pty Ltd; ex parte Smith & Jacobs [No 2] [2025] WASC 405, the Court held that a failure to provide the 14 days’ notice of a board meeting, required by a shareholder agreement, to appoint a voluntary administrator, was a procedural irregularity that could be cured.

Key Takeaway

According to the latest statistics from the Australian Securities and Investments Commission (ASIC), the construction industry has faced sustained and accelerating financial distress over the past four years. Since FY 2021-2022, the number of insolvency appointments has almost tripled, with nearly 4,900 cases in FY 2024-2025 alone. And, the 744 cases already recorded for FY 2025-2026 indicate the construction industry continues to suffer severe financial distress.