Terminating DoCA's (Part 3) – Administrators' Casting Vote

Commissioner of State Revenue v McCabe (No. 2) [2024] FCA 662 ("McCabe")

IMO Academy Construction & Development Pty Limited [2024] NSWSC 808 ("Academy Construction")

Summary

Where there is a deadlock between the majority in value of creditors and those creditors with a majority in number on the vote for a DoCA, the administrator has a casting vote.

Terminating DoCA's (Part 2) – Unfair Prejudice or Injustice

Canstruct Pty Limited v Project Sea Dragon Pty Limited (No. 4) [2024] FCA 112 ("Canstruct")¹

Commissioner of State Revenue v McCabe (No. 2) [2024] FCA 662 ("McCabe")

Academy Construction & Development Pty Limited [2024] NSWSC 808 ("Academy Construction")

Deeds of Company Arrangement – Insured Claims

Destination Brisbane Consortium Integrated Resort Operations Pty Ltd as Trustee v PCA (Qld) Pty Ltd (subject to a Deed of Company Arrangement) [2024] QSC 178 ("Destination Brisbane")

In Destination Brisbane two questions, which concerned the entitlements of insured creditors under a DoCA, arose for consideration in the context of an application for judicial advice:

Due Diligence by Voluntary Administrators in respect of their Appointment

Robust Construction Services Pty Ltd [2023] NSWSC 1156 ("Robust")

DoCA's: What Claims can be Released?

PK Riddell Investments Pty Ltd v Upwards Up And Gone Pty Ltd [2024] VSC 159 ("Riddell Investments")

Limiting Liability of Administrators for Employee Wages

Walley IMO PGP Group (Aust) Pty Ltd [2023] FCA 1554 ("PGP Group") and Crosbie IMO Godfreys Group Pty Ltd [2024] FCA 60 ("Godfreys")

Voluntary administrators have been able to seek orders releasing them from their personal liability for debts incurred by them in the course of conducting a company's business. That relief has been available where it has been necessary to support the continuing operation of that business.

The number of company insolvencies in 2023 increased by over a third compared to 2022. The hospitality sector was particularly badly affected, with 53% more insolvencies than in 2022.

It appears that 2024 will be similarly challenging for companies in the hospitality sector. The Restaurant Association of Ireland (RAI) has set out the main challenges faced by the industry, including increased energy and labour costs, and the VAT rate reverting to 13.5% after having been reduced to 9% during the covid-19 pandemic.

The High Court has reaffirmed the test to be applied in considering an application to dismiss a bankruptcy summons grounded on a judgment.

The bankruptcy process in Ireland involves multiple steps and the debtor can seek to bring it to a halt at each step. Debtors often seek to rerun effectively the same arguments at each step, ignoring previous findings by the courts. One such step is an application to dismiss a bankruptcy summons.

The Irish High Court has determined that the liquidation of an Irish aircraft leasing company, which was a 100% subsidiary of a Russian company expressly subject to EU sanctions, rebuts the presumption that the company was controlled by the Russian parent for the purpose of EU sanctions.

This enables the liquidators to deal with the assets without costly and time-consuming derogation applications.

Background

Irish company law provides that if a charge granted by a company is not registered in the Companies Registration Office (CRO) within 21 days of its creation, it is void against a liquidator and any creditor of the company. There is a duty imposed on a company which grants a charge to register the charge in the CRO but the creditor taking the charge can also do so.

Diamond Rock Developments Ltd (the Company) granted a mortgage over a property. That mortgage was registered in the Land Registry but was not registered in the CRO.