By following certain steps and focusing on relevant courses of action, directors of startups can leverage the Safe Harbour provisions to increase their chances of navigating financial difficulties and achieving a better outcome for their company.
Liquidators accepting a new appointment will have to think carefully if there's a possibility of disclaiming onerous property as part of that appointment.
Victoria's Court of Appeal has reaffirmed the risk that a disclaimer of property may be set aside where the liquidators are indemnified, and the need for liquidators to be mindful where the company holds contaminated property.
Before embarking on any litigation, or continuing any litigation that is on foot at the time of the liquidator's appointment, a liquidator should carefully weigh up the benefits and risks of pursuing a particular course of action.
A liquidator can be exposed personally in litigation. We discuss the risks to a liquidator associated with litigation by examining some recent cases where liquidators have been ordered to pay costs personally. We provide guidance on ways to mitigate this risk.
Balancing risk – weighing up competing priorities
Liquidators need to be mindful that a disclaimer of property may be challenged. The Supreme Court of Victoria underscored a key issue in establishing "prejudice" to creditors in a liquidation, holding that a disclaimer of property may be set aside where the liquidators are indemnified.
The reforms proposed to combat illegal phoenix activity range from light-touch through to more significant changes to the Corporations Act.
We are seeing attempts by the Chinese Government to provide the market with more sophisticated tools for dealing with unprofitable companies.
China is attempting to align its insolvency regime to international standards and introduce additional tools for dealing with the country's rising debt load.
Australian lenders with exposures to these debts (particularly in the coal, steel, manufacturing, cement, shipbuilding, solar, heavy machinery, mining and property sectors) should reassess insolvency risk and understand their options.
Sabine Bankruptcy Judge Authorizes Rejection of Gas Gathering Agreements
In In re Sabine Oil & Gas Corp., 2016 BL 70494 (Bankr. S.D.N.Y. Mar. 8, 2016), Judge Shelley C. Chapman of the U.S. Bankruptcy Court for the Southern District of New York permitted Sabine Oil & Gas Corporation (“Sabine”) to reject three gas gathering and handling agreements with Nordheim Eagle Ford Gathering, LLC (“Nordheim”) and HPIP Gonzales Holdings, LLC (“HPIP”). All of the agreements are governed by Texas law.
On April 7, 2016, Quicksilver Resources Inc. ("Quicksilver") announced that it closed the sale of its U.S. assets for $245 million to BlueStone Natural Resources II ("BlueStone") in connection with Quicksilver's bankruptcy cases and pursuant to an Asset Purchase Agreement that was approved by Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court for the District of Delaware in January 2016.
On Tuesday, March 8, 2016, U.S. Bankruptcy Judge Shelley C. Chapman in New York permitted Sabine Oil & Gas Corporation to reject three gas gathering and handling agreements with Nordheim Eagle Ford Gathering, LLC and HPIP Gonzales Holdings, LLC. All of the agreements are governed by Texas law.