This week’s TGIF considers a recent decision of the High Court of Australia, in which a 4:3 majority held that a former trustee is not owed any fiduciary obligation by a successor trustee.

Key takeaways

In Davis-Jacenko v Roxy’s Bootcamp Pty Limited [2024] NSWSC 702, McGrath J delivered an extempore decision, appointing provisional liquidators in respect of Roxy’s Bootcamp Pty Limited (theCompany). His Honour stated that it was “a paradigm case” for the court to intervene to preserve the status quo.

Key Takeaways

When do amounts owed to a company constitute ‘circulating assets’ and how should they be distributed? This crucial question has not always been answered predictably in recent cases. The Court of Appeal’s decision in Resilient Investment Group Pty Ltd v Barnet and Hodgkinson as liquidators of Spitfire Corporation Limited (in liq) [2023] NSWCA 118 has provided a framework for navigating the relevant principles in the context of a priority dispute over R&D tax refunds.

Key takeaways

The National Security Investment Act 2021 (the “Act”) came into effect on 4 January 2022 and introduced a new UK investment screening regime focused on national security risks (the “NSI Regime”). It is similar to the Committee on Foreign Investment in the United States (“CFIUS”) regime. The Act is wide reaching; it provides the UK government with the power to review and intervene in transactions that may pose a UK national security risk due to a transfer of control of sensitive entities or assets.

On 10 March 2022, the UK High Court held the adjourned sanction hearing regarding Smile Telecoms Holdings Limited’s (“Smile”) second proposed restructuring plan. Despite Smile Telecoms’ first restructuring plan being sanctioned by the UK High Court back in March 2021, the African telecommunications company still faced liquidity shortages. This prompted the company to propose a second restructuring plan under Part 26A of the UK Companies Act 2006 (the “Companies Act”). The second restructuring plan would see the Smile Telecoms’ group senior secured lender, 966 CO S.a. r.l.

In the recent case of Stubbings v Jams 2 Pty Ltd [2022] HCA 6, the High Court has allowed an appeal relating to asset-based lending (ABL) and the enforceability of security associated with these loans. The High Court held that whilst asset-based lending itself is not unconscionable, certain conduct may render loans and security unenforceable. The decision is a reminder that lenders should ensure the circumstances of potential borrowers are fully scrutinised prior to lending.

This update summarises the latest jurisprudence on insolvent schemes of arrangement (schemes) and restructuring plans (RPs), and provides an overview of the key themes that are emerging in this area.

Key Concepts and Notes

This week’s TGIF considers a recent case where the Supreme Court of Queensland rejected a director’s application to access an executory contract of sale entered into by receivers and managers on the basis it was not a ‘financial record’

Key Takeaways

This week’s TGIF looks at the decision of the Federal Court of Australia in Donoghue v Russells (A Firm)[2021] FCA 798 in which Mr Donoghue appealed a decision to make a sequestration order which was premised on him ‘carrying on business in Australia' for the purpose of section 43(1)(b)(iii) of the Bankruptcy Act 1966 (Cth) (Act).

Key Takeaways

Overview

On 12 May 2021, the High Court sanctioned three inter-conditional restructuring plans, under the Part 26A of the Companies Act 2006, for certain English subsidiaries of the Virgin Active group, despite major opposition of certain landlords.[1] In the landmark decision, the High Court exercised its discretion to cram-down multiple classes of dissenting landlords in each plan, compromising their claims.