In bankruptcy, one of the “powers” granted to a trustee is the ability to undo previously completed transactions in order to facilitate payments to creditors. However, the Bankruptcy Code prevents a trustee from unwinding certain types of transactions. The safe harbor provision of 11 U.S.C. § 546(e) protects financial institutions performing securities transactions from having to disgorge payments initially made by a now bankrupt company.

When a dealership files for bankruptcy, a manufacturer will be faced with critical decisions regarding the proposed restructuring and the treatment of its dealer agreement. The bankruptcy code provides debtors with certain rights in order to maximize the recovery for creditors. Manufacturers must be cognizant of these rights in any dealer bankruptcy.

The Bankruptcy Protector

This week’s TGIF considers what the UK decision of Simpkin v The Berkeley Group Holdings PLC [2017] EWHC 1472 means for insolvency practitioners seeking to access potentially privileged documents created by employees of appointee companies.

BACKGROUND

This week’s TGIF examines a recent decision of the Supreme Court of New South Wales which considered whether payments made by a third party to a company’s creditors could be recovered as unfair preferences.

What happened?

On 2 September 2015, liquidators were appointed to a building and construction company (the Company) and later commenced proceedings against eight defendants for the recovery of payments considered to be unfair preferences.

This week’s TGIF considers In re City Pacific Limited in which the NSW Supreme Court considered whether to approve a liquidator entering into a litigation funding agreement under which the funder would receive a premium of at least 50% of any judgment or settlement achieved.

WHAT HAPPENED?

In late 2009, two related companies were wound up and the same liquidator was appointed. The liquidator instituted two proceedings in the NSW Supreme Court:

This week’s TGIF considersAlleasing Pty Ltd, in the matter of OneSteel Manufacturing Pty Ltd in which the Court considered the potential prejudice to creditors in extending the time for registration of security interests

Background

This week’s TGIF considers Bunnings Group Ltd v Hanson Construction Materials Pty Ltd & Anor [2017] WASC 132, where the Court considered whether the order of registration of caveats determined the priority of competing unregistered charges.

BACKGROUND

Bunnings and Hanson each supplied building materials to Capital Works prior to Capital Works’ liquidation by means of a creditors’ voluntary winding up.

Creation of the charges

This week’s TGIF considers the recent proposals to crackdown on rogue directors and reduce the burden on FEG to pay unpaid workers.

A last resort – but for who?

On 17 May 2017, the Federal Government published a consultation paper inviting submissions on options for law reform to address corporate misuse of the Fair Entitlements Guarantee (‘FEG’) scheme.

This week’s TGIF considers the case of In the matter of Boart Longyear Limited [2017] NSWSC 537 in which the NSW Supreme Court made orders to assist with the restructuring of a group of companies to the ultimate benefit of creditors.

BACKGROUND

A group of companies in financial difficulty sought the Court’s approval of two interdependent creditors’ schemes of arrangement which would effect a restructuring of the group’s financial affairs. The group had operations both in Australia and the US.