Part 1 of this two-part series explored potential legislative changes which could impact the Australian insolvency landscape in 2022 and beyond. Part 2 addresses the recent major developments in case law that have the potential to shape the insolvency landscape in Australia for many years to come.
To promote the finality and binding effect of confirmed chapter 11 plans, the Bankruptcy Code categorically prohibits any modification of a confirmed plan after it has been "substantially consummated." Stakeholders, however, sometimes attempt to skirt this prohibition by characterizing proposed changes to a substantially consummated chapter 11 plan as some other form of relief, such as modification of the confirmation order or a plan document, or reconsideration of the allowed amount of a claim. The U.S.
Financial support for businesses impacted by COVID-19, legislative provisions (such as the statutory relaxation to insolvent trading liability) and general creditor leniency have resulted inhistorically low insolvency appointments during the last two years.
The High Court has handed down the long-awaited decision of Stubbings v Jams 2 Pty Ltd [2022] HCA 6, unanimously overturning the decision of the Victorian Court of Appeal. In so doing, the Court held that enforcement of rights under a personal guarantee was unconscionable.
In Walton v ACN 004 410 833 Limited (formerly Arrium Limited) (in liquidation) [2022] HCA 3, the High Court extended the purpose for which, and incidentally parties by whom, public examinations may be used.
One year ago, we wrote that, unlike in 2019, when the large business bankruptcy landscape was generally shaped by economic, market, and leverage factors, the COVID-19 pandemic dominated the narrative in 2020. The pandemic may not have been responsible for every reversal of corporate fortune in 2020, but it weighed heavily on the scale, particularly for companies in the energy, retail, restaurant, entertainment, health care, travel, and hospitality industries.
In 2019, the U.S. Court of Appeals for the Second Circuit made headlines when it ruled that creditors' state law fraudulent transfer claims arising from the 2007 leveraged buyout ("LBO") of Tribune Co. ("Tribune") were preempted by the safe harbor for certain securities, commodity, or forward contract payments set forth in section 546(e) of the Bankruptcy Code. In that ruling, In re Tribune Co. Fraudulent Conveyance Litig., 946 F.3d 66 (2d Cir. 2019), cert. denied, 209 L. Ed. 2d 568 (U.S. Apr.
For some time, controversy has surrounded the question as to whether unsecured creditors of an insolvent company can utilise set-off under s 553C of the Corporations Act 2001 (Cth) (Act) against unfair preference claims.
Public examinations are a powerful process for a liquidator to explore the reasons for a company’s failure, identify any claims the liquidator or the company might have and assess recoverability prospects following any successful claim.
In a similar vein, liquidators might also obtain document production orders against natural persons and corporate entities. Such document production orders are often obtained in advance of examinations, and can assist the liquidator in its investigations and preparation for the examinations.
The court’s power to overturn the decisions of insolvency practitioners in a company’s external administration was highlighted in the recent case of Tuscan Capital Partners Pty Ltd v Trading Australia Pty Ltd (in liq), in the matter of Trading Australia Pty Ltd (in liq) (Proof of Debt) [2021] FCA 1061 (Tuscan).