This week’s TGIF considers the process that a liquidator may follow when a director fails to attend at an examination. It considers the appeal in Mensink v Parbery [2018] FCAFC 101, in which the Court set out the relevant differences between arrest warrants issued to require a director to attend an examination, and arrest warrants to answer charges for contempt.

What happened?

Bankruptcy plans often include provisions releasing debtors and their officers and directors from certain potential liability. In Zardinovsky v. Arctic Glacier Income Fund, No. 17-2522 (3d Cir. Aug. 20, 2018), the United States Court of Appeals for the Third Circuit held that such a provision bound shareholders who purchased the shares after confirmation, as to post-confirmation claims including securities fraud and breach of fiduciary duty.

How far do liquidators’ powers to demand documents for public examinations extend? Which documents can they request and from whom can they request them?

In this week’s TGIF, we consider these questions in the context of the recent case of Re Cathro [2018] FCA 1138.

BACKGROUND

This week’s TGIF examines a recent decision of the New South Wales Court of Appeal in Hosking v Extend N Build Pty Limited [2018] NSWCA 149, which considered whether payments made by a third party to an insolvent company’s creditors could be recovered by the liquidator as unfair preferences.

What happened?

This week’s TGIF considers In the matter of MJM(WA) Enterprises Pty Ltd (in liq) [2018] NSWSC 944, where the Court approved a liquidator’s remuneration but deferred decisions about trust distributions until after the Re Amerind litigation finishes.

What happened?

The company operated two barbershops in Perth as trustee for a family trust before liquidators were appointed in May 2017.

Section 327(a) of the Bankruptcy Code imposes restrictions on the employment of professionals to assist a trustee, requiring that such professionals “not hold or represent an interest adverse to the estate” and be “disinterested persons.” Section 363(b) permits the trustee, after notice and a hearing, to “use, sell, or lease, other than in the ordinary course of business, property of the estate,” and does not impose restrictions on employment comparable to those of section 327(a).

This week’s TGIF considers In the matter of Arrium Limited [2018] NSWSC 747 in which the Court granted creditors access to documents produced in public examinations.

What happened?

This week’s TGIF considers the case ofMighty River International Ltd v Hughes, where the High Court upheld the validity of Holding DOCAs.

Case history

This case concerned the validity of a deed of company arrangement (DOCA) between Mesa Minerals Ltd (Mesa) and its creditors.

This week’s TGIF considers some ways insolvency practitioners can make their lives easier by proactively using the courts to resolve uncertainty – such as liquidators seeking appointment as receivers of trust property as in the recent Federal Court decision of Freeman; In the matter of Blue Oasis Holdings Pty Ltd [2018] FCA 822.

WHAT HAPPENED?

Liquidators were appointed to the corporate trustee of a family trust.

On June 4, the Supreme Court decided Lamar, Archer & Cofrin, LLP v. Appling, No. 16-1215, in a unanimous opinion by Justice Sotomayor. The Court affirmed the Eleventh Circuit and resolved a circuit split about the meaning of “statement respecting the debtor’s . . . financial condition” in section 523(a)(2) of the Bankruptcy Code.