Communicating with Scheme Creditors: Beware of Zealous Advocacy

A-Cap Energy Limited [2023] FCA 1356 ("A-Cap") and Symbio Holdings Limited [2024] FCA 40 ("Symbio")

The main communication with scheme creditors is the explanatory statement approved at the first court hearing.

However, there can be other communications which are proposed to be sent to creditors.

In the case of other communications which are known at the time of the first hearing, they can include:

DoCA’s: Discriminating between Creditors -Is it for a Proper Purpose

Canstruct Pty Limited v Project Sea Dragon Pty Limited (No. 4) [2024] FCA 112 ("Canstruct")

The Federal Court in Morgan, in the matter of Traditional Values Management Limited (in liq)[2024] FCA 74, approved an abridged process that allowed the liquidator to admit debts of a group of unsecured creditors without requiring a formal proof of debt.

Key Takeaways

Limiting Liability of Administrators for Employee Wages

Walley IMO PGP Group (Aust) Pty Ltd [2023] FCA 1554 ("PGP Group") and Crosbie IMO Godfreys Group Pty Ltd [2024] FCA 60 ("Godfreys")

Voluntary administrators have been able to seek orders releasing them from their personal liability for debts incurred by them in the course of conducting a company's business. That relief has been available where it has been necessary to support the continuing operation of that business.

Lenders Beware: Security Vulnerable as an unreasonable director-related transaction

Cooper as Liquidator of Runtong Investment and Development Pty Limited) v CEG Director Securities Pty Limited [2024] FCA 6. ("CEG")

Fiduciary Duties of Receivers

Receivers appointed to enforce a security owe their fiduciary duties to their appointor and not to the mortgagor. So, when realising the assets of the mortgagor, the receivers can focus their attention on pursuing that course of action which, as they judge it, is best calculated to optimise the position of their appointor; Salmon v Albarran [2023] NSWSC 1238 ("Salmon").

In this week’s TGIF, we consider ASIC v Bettles [2023] FCA 975 and ASIC v Jones [2023] WASCA 130, two cases which bring into focus the conduct of insolvency practitioners and alleged abrogation of their duties and independence.

Key takeaways

In this week’s TGIF, we consider Jahani, in the matter of Ralan Property Services Pty Ltd (receivers and managers appointed) (in liq) [2023] FCA 738, a Federal Court decision approving the liquidators’ entry into funding agreements.

Key takeaways

In this week’s TGIF, we consider the Court of Appeal’s decision in Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88 and the challenges faced by lenders in accepting representations as to solvency and the financial position of borrowers.

Key takeaways

This week’s, TGIF considers the Court of Appeal’s decision in Westgem Investments Pty Ltd v Commonwealth Bank of Australia Ltd [2022] WASCA 132, handed down on 4 November 2022 in favour of the Commonwealth Bank of Australia Ltd and Lloyds Banking Group (Financiers).

Key takeaways