Castlereagh Properties Limited (Castlereagh) and Gibbston Water Holdings Limited (Water Holdings) were both companies in David Henderson's Property Venture group. Castlereagh and Water Holdings entered into a sale and purchase agreement (SPA), under which Water Holdings sold all of its shares in Gibbston Water Services Limited (Water Services) to Castlereagh for $1.  Water Holdings was subsequently put into liquidation.

Torchlight Fund No 1 (Torchlight) contracted with Wilaci Pty Ltd (Wilaci) for a $37m loan. The terms included the payment of a 'late fee' of $500,000 per week.  Following default, Torchlight applied for a declaration that the fee was a penalty, and therefore unenforceable.  Torchlight also applied for directions as to the payment of the costs of the receivers appointed by Wilaci, arguing that a clause indemnifying Wilaci in respect of a default did not apply to such costs.  

Mr Pala and Mr Luthera were directors of Shanton, a large retailer of women's clothing in New Zealand.  BTC Group Limited (BTC) was in the business of supplying clothing to Shanton in accordance with Shanton's stock orders.  BTC had obtained guarantees from Shanton's directors, pursuant to which each director guaranteed the obligations of Shanton to BTC.  Earlier this year, Shanton was unable to pay its debts as they fell due and was placed into voluntary administration owing creditors over $7m.

In Stojkov v Kamal [2015] NZHC 2513 a creditor, Mr Stokjov, gave notice to the appointed liquidator, Mr Kamal, for a meeting of creditors to be called.  Mr Kamal did not call the meeting and maintained that the notice was given out of time.  Mr Stokjov reasonably pointed out that this was plainly incorrect.  Mr Kamal, despite clearly being in breach of his duty, still refused to call the meeting and later claimed (quite irrelevantly) that the cost of the meeting was not justified.

Sanson v Ebert Construction Limited [2015] NZHC 2402 concerned the successful application by liquidators to set aside payments made pursuant to a direct deed arrangement, as they were payments made on behalf of the insolvent developer. Sanson was the first New Zealand case where a liquidator has raised this argument but it is unlikely to be the last.  Direct deeds are a common contractual tool in construction projects to give financiers the right to step into the place of the developer and directly arrange for payments to the contractor to ensure that t

In King v PFL Finance Limited & Anor [2015] NZCA 517, the Kings, a husband and wife team of farmers, arranged finance from PFL Finance Limited but the loan went into default.  PFL served PLA notices but failed to serve the Kings as guarantors.  A receiver was appointed to the farming operation, who determined to cease trading the day after his appointment.

In Purewal v Countrywide Residential Lettings Ltd [2015] EWCA Civ 1122, the receivers of a property did not make an insurance claim in relation to damage to the property.  The mortgagor of the property (a bankrupt) repaired the property himself.  He brought an action against the receivers for breach of duty by failing to make an insurance claim, claiming damages for the cost of the repairs.

With the effect of 1 September 2015, Hungary introduces legal provisions on personal insolvency. Such procedure is reserved for private individuals (may they be entrepreneurs or consumers), who have debts between HUF 2 mln (approx. EUR 6,500) and HUF 60 mln (approx.EUR 195,000).

Under Hungarian insolvency law, creditors secured by mortgages or pledges are entitled to privileged satisfaction of their claim, meaning concretely that they are entitled to receive the whole proceeds reached in the course of the realization of the pledged property after deduction of the (i) cost of keeping the property in good repair and of maintenance, and costs of selling the pledged property; and (ii) the liquidator’s fee up to 5% of the net purchase price.

Potential liability for wrongful trading

In Hungary the Act no. XLIX of 1991 on the insolvency and compulsory winding up procedure (hereinafter referred to as “Insolvency Act”) established the term “wrongful trading”. Under section 33/A of the Insolvency Act a manager of a company shall be personally liable if after the occurrence of threatening insolvency (i.e. when the company is unable to settle its liabilities when due) the director’s duties have not been fulfilled based on the priority of the company’s creditors’ interest.