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

The Land and Conveyancing Law Reform (Amendment) Bill 2019 (the “Bill”) proposes to broaden the factors that the courts can consider in refusing orders for possession sought by lenders.

The Bill has its roots in the Keeping People in their Homes Bill, 2018, introduced by Kevin “Boxer” Moran T.D., as a private member’s bill. However, the Bill does not go as far as Mr Moran’s bill and, for instance, does not require disclosure of the price paid by a purchaser of the loan.

Background

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.

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.

Overall 2018 has produced a number of positive judgments from the perspective of lenders and insolvency practitioners.

In particular, the courts delivered many useful judgments disposing of numerous challenges to the enforceability of loans and security and, also, restricting abuse of the courts’ processes.

Contemptuous McKenzie Friends

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

The Court of Appeal has helpfully confirmed that a judgment creditor can seek an order appointing a receiver by way of equitable execution where:

• the debtor holds a legal or equitable interest in property; and
• execution against the property is not available at law by one of the usual methods, for instance via the sheriff or by a garnishee order.

There was previously doubt as to whether such a receiver could be appointed where the debtor held a legal, as opposed to an equitable interest, in property.

The High Court has recently expressed concern that distressed borrowers are being duped into paying money to the anonymous promoters of schemes, which purport to protect them from enforcement by lenders but are actually ‘utterly misguided and spurious’.

There are a number of schemes being promoted at the moment that supposedly protect borrowers in arrears from enforcement by their lender.