Borrower beware: in times of distress, your credit documents may give your secured lenders an opportunity to “flip” control of your board

Distress happens, even at companies that once appeared financially solid. When it does, the company, its board (which may be controlled by a sponsor in a public or private equity scenario), and its lenders often enter into restructuring discussions in search of a consensual path forward, typically under the terms of a forbearance agreement.

This week’s TGIF considers a recent case where the Supreme Court of Queensland rejected a director’s application to access an executory contract of sale entered into by receivers and managers on the basis it was not a ‘financial record’

Key Takeaways

This week’s TGIF looks at the decision of the Federal Court of Australia in Donoghue v Russells (A Firm)[2021] FCA 798 in which Mr Donoghue appealed a decision to make a sequestration order which was premised on him ‘carrying on business in Australia' for the purpose of section 43(1)(b)(iii) of the Bankruptcy Act 1966 (Cth) (Act).

Key Takeaways

This week’s TGIF considers an application to the Federal Court for the private hearing of a public examination where separate criminal proceedings were also on foot.

Key takeaways

This week’s TGIF looks at a recent decision of the Victorian Supreme Court, where a winding up application was adjourned to allow the debtor company to pursue restructuring under the recently introduced small business restructuring reforms.

Key takeaways

The High Court decision in Re All Star Leisure (Group) Limited (2019), which confirmed the validity of an administration appointment by a qualified floating charge holder (QFCH) out of court hours by CE-Filing, will be welcomed.

The decision accepted that the rules did not currently provide for such an out of hours appointment to take place but it confirmed it was a defect capable of being cured and, perhaps more importantly, the court also stressed the need for an urgent review of the rules so that there is no doubt such an appointment could be made.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit has voided its previous near explicit declaration that make-whole provisions are always unmatured interest, and therefore subject to disallowance under section 502(b) of the Bankruptcy Code in Ultra Petroleum.

In certain circumstances, if a claim is proven, the defendant will be able to offset monies that are due to it from the claimant - this is known as set off.

Here, we cover the basics of set off, including the different types of set off and key points you need to know.

What is set off?

Where the right of set off arises, it can act as a defence to part or the whole of a claim.

Judge Drain has now issued a long-awaited Order on Remand from the Second Circuit’s decision in Momentive Performance Materials determining the appropriate cramdown interest rate applicable to replacement notes issued by Momentive.

This week’s TGIF takes a look at the recent case of Mills Oakley (a partnership) v Asset HQ Australia Pty Ltd [2019] VSC 98, where the Supreme Court of Victoria found the statutory presumption of insolvency did not arise as there had not been effective service of a statutory demand due to a typographical error in the postal address.

What happened?