Introduction
In December 2024, Australian Securities and Investments Commission (ASIC) released an updated version of Regulatory Guide RG 217. The guidance is designed to assist directors in complying with their duty to prevent insolvent trading. It sets out four key principles for directors to avoid insolvent trading, explains the safe harbour defence (which offers protection from personal liability), and clarifies ASIC’s approach to assessing breaches of duty and the application of the safe harbour defence.
We are pleased to share our latest instalment of ML Covered, our monthly round-up of key events relevant to those dealing with Management Liability Policies covering D&O, EPL and PTL-type risks.
Insolvency Service publishes its 2024/25 enforcement actions against directors
The Insolvency Service has published its enforcement outcomes for 2024-25, detailing the enforcement actions taken against directors. The information is not for the entire year but covers the period between April 2024 to December 2024.
Welcome to the second edition of ML Covered, our new monthly round-up of key events that are relevant for those dealing with Management Liability Policies covering D&O, EPL and PTL-type risks.
Latest insolvencies figures & quantifying "trading misfeasance" claims
In Arab v Pan, in the matter of Pan (No 3) [2024] FCA 563, the Federal Court of Australia addressed critical issues concerning the scope and compliance of summonses for production in bankruptcy, which will also impact corporate insolvency proceedings and such proceedings in other common law jurisdictions.
In FamilyMart China Holding Co Ltd (Respondent) v Ting Chuan (Cayman Islands) Holding Corporation (Appellant) (Cayman Islands) [2023] UKPC 33, the Privy Council has provided useful guidance about the interplay between an arbitration agreement and exercise of the Cayman court’s powers and discretion to wind up a company on just and equitable grounds.
This article considers the New South Wales Supreme Court’s decision to grant leave to proceed against non-appearing foreign defendants, which were in foreign insolvency proceedings.
There has been a significant growth of litigation in Australia where there is at least one foreign defendant. This is unsurprising given the growing number of international agreements under which the parties govern their contract under Australian law and expressly agree to Australian court jurisdiction, and the volume of global trade with Australia and foreign direct investment.
Understanding whether a company is insolvent, and the date of insolvency, is essential for directors and accountants who advise companies, as well as liquidators and other parties bringing insolvency-based claims. In understanding these issues, the analysis may need to go beyond establishing present-day liquidity – for example, what impact do long term-debts have on a company’s solvency and how are they used to prove insolvency? Which debts are relevant to the cashflow test? Whether a company is ‘able to pay all its debts’ as and when they become ‘due and payable’?
On 8 February 2023, the High Court of Australia (being Australia’s highest court) simultaneously handed down two highly anticipated insolvency law decisions:
In the recent case of LMN v Bitflyer Holdings Inc & Ors [2022] EWHC 2954, the High Court of England and Wales made orders directed at a number of cryptocurrency exchanges requiring them to provide information in relation to misappropriated crypto assets.
The Court’s decision in Barokes Pty Ltd (in liq) [2022] VSC 642 is important because, for the first time in Australia, a Court has granted a creditor leave to bring a derivative action in the name of a company in liquidation against its liquidators. This case opens another significant gateway for creditors to seek redress for their losses.