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

It is not uncommon for contractors, in several industry sectors, to contract with a special purpose vehicle (SPV), whose day-to-day management is effectively controlled by a parent company, and the SPV has with little to no assets beyond cash flow provided by its parent. In this article we look at what a claimant could do outside of the traditional insolvency process in circumstances where the SPV goes into a form of external administration such as administration or liquidation and there are no assets available to the external administrators.

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

In the recent decision of Re PBS Building (Qld) Pty Ltd [2024] QSC 108, the Supreme Court of Queensland considered for the first time the operation of the State’s new project and retention trust account regime in the context of an insolvency. The decision provides useful guidance to insolvency practitioners and subcontractors as to their rights in relation to trust accounts established by an insolvent head contractor.

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

In a landmark decision, the BVI Commercial Court has confirmed that ultimate beneficial interest holders of notes are 'creditors' under the BVI Insolvency Act and so have standing to issue liquidation applications against defaulting note issuers.

Mourant Ozannes, working alongside Ashurst (Hong Kong) and Counsel, Peter Burgess of South Square, has secured a landmark decision in the matter of Cithara Global Multi-Strategy SPC (Cithara) v Haimen Zhongnan Investment Development (International) Co Ltd (the Company).

Two decisions handed down on the same day – one by the Eastern Caribbean Court of Appeal and the other by the Commercial Division of the High Court – illustrate the approach of British Virgin Islands Courts to applications to appoint liquidators in circumstances where the subject matter of a dispute as to the existence of a debt falls within the scope of an arbitration agreement.

Introduction

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.

The High Court of Australia’s decision in Wells Fargo Trust Company, National Association (as Owner Trustee) & Anor v VB Leaseco Pty Ltd (Administrators Appointed) & Ors (the “Willis” case).

On Wednesday, 16 March 2022, the High Court of Australia handed down its decision in the Willis case.

On the 2 August 2021 Treasury released a consultation paper titled ‘Helping Companies Restructure by Improving Schemes of Arrangement. The consultation is aimed at reforming Australia’s scheme of arrangement procedure.