This week’s TGIF covers the Federal Court’s refusal in Lock, in the matter of Cedenco JV Australia Pty Ltd (in liq) (No 2) [2019] FCA 93 to validate creditors’ resolutions fixing $5m+ of remuneration where creditors were given insufficient information; reduced remuneration to be fixed.

11 February orders refusing validation

This week’s TGIF considers Re Legend International Holdings Inc (In liq) [2018] VSC 789, the next chapter in the story of Legend International Holdings Inc, where the Court found a company to be insolvent on the basis of a foreign debt.

This week’s TGIF considers a recent Federal Court decision which validated dispositions of property made by a company after the winding up began.

WHAT HAPPENED?

On 8 May 2017, Bond J ordered that a coal exploration company (the Company) be wound up on just and equitable grounds following a shareholder oppression claim. So as to avoid the consequences of a liquidation, his Honour immediately stayed that order for a period of 7 days to enable the warring parties a final chance to resolve their differences.

This week’s TGIF considers a recent decision of the Federal Court where a special purpose liquidator was appointed to investigate suspected illegal phoenix activity.

WHAT HAPPENED?

The company formerly known as Intelara Pty Ltd (Intelara) was wholly owned by and had common directors with Intelara Holdings Pty Ltd (Holdings). The directors of both companies were also the shareholders of Holdings.

Once again, the statistics show an increase in corporate and personal insolvencies nationally, with a reported 16,090 corporate insolvencies and 115,299 personal insolvencies in the UK in 2018. While the media is focusing on how this reflects on the economy and the government, insolvency specialist Tony Sampson looks at what it means for the millions of creditors involved in those insolvencies. In short, what will those creditors actually receive?

This week’s TGIF considers Re Broens Pty Limited (in liq) [2018] NSWSC 1747, in which a liquidator was held to be justified in making distributions to creditors in spite of several claims by employees for long service leave entitlements.

What happened?

On 19 December 2016, voluntary administrators were appointed to Broens Pty Limited (the Company). The Company supplied machinery & services to manufacturers in aerospace, rail, defence and mining industries.

This week’s TGIF considers Australian Worldwide Pty Ltd v AW Exports Pty Ltd where the Court awarded security for costs against plaintiff companies in liquidation, despite a litigation funder’s indemnity against adverse costs.

Background

Are you a company director? If so, are you fully aware of your responsibilities and duties to your company? It is common for directors to be completely uninformed of the full extent of their duties, sometimes holding the belief that they can essentially do what they like – particularly if they are also a sole shareholder, which is often the case with SMEs.

What are directors’ duties?

The benefits of being a director of a limited company are many. Not necessarily because of the tax benefits but, rather, the personal protection given to directors by the corporate veil surrounding limited companies.

That corporate veil means that directors’ liabilities for the debts of the company are limited to the extent of their shareholding (maybe £1) in the UK this concept (outside insolvency) is sacrosanct and protected by the Courts.