A recent Victorian Supreme Court decision has resulted in the Commonwealth losing priority status for some $3.8m paid to the employees of a collapsed company, due to an unusual gap in the priority regime created under the Corporations Act.

The U.S. Court of Appeals for the Eleventh Circuit recently held that a court cannot extinguish a secured creditor’s state-law security interests for failure to file a proof of claim during the administration of an equity receivership over entities involved in a Ponzi scheme.

A copy of the opinion in Securities and Exchange Commission v. Wells Fargo Bank is available at: Link to Opinion.

This week’s TGIF considers a recent Federal Court decision in which relief was sought under section 588FM of the Corporations Act to ensure a security interest perfected after the ‘critical time’ did not automatically vest.

What happened?

On 7 April 2016, administrators were appointed to OneSteel. OneSteel, a member of the Arrium Group of Companies, subsequently entered into a deed of company arrangement.

The U.S. Court of Appeals for the Fifth Circuit recently held that the collection of garnished wages earned during the 90 days prior to the filing of a bankruptcy petition is an avoidable transfer, even if the garnishment was served before the 90-day preference period.

The ruling creates a potential split with the Second, Seventh, and Eleventh Circuits, with the Fifth Circuit joining with the Sixth Circuit on the issue.

This week’s TGIF considers the case of In the matter ofCNL Transport Pty Ltd (in liq) [2017] NSWSC 291, where the New South Wales Supreme Court terminated a liquidation where the company was solvent and its debts had been paid.

Background

A company was wound up by the Court on 27 February 2017 following its failure to comply with a creditor’s statutory demand. The statutory demand had been issued by an insurer in respect of unpaid workers’ compensation insurance premiums.

This week’s TGIF considers Fordyce v Ryan & Anor; Fordyce v Quinn & Anor [2016] QSC 307, where the Court considered whether a beneficiary’s interest in a discretionary trust amounted to ‘property’ for the purposes of the Bankruptcy Act 1966 (Cth).

BACKGROUND

The U.S. Court of Appeals for the Fourth Circuit recently held that certain deposits and wire transfers into a bankrupt debtor’s personal, unrestricted checking account in the ordinary course of business were not “transfers” under § 101(54) of the Bankruptcy Code, affirming the district court’s and bankruptcy court’s entry of summary judgment in favor of the bank in an adversary proceeding brought by the bankruptcy trustee.

The U.S. Court of Appeals for the Sixth Circuit recently held that a bankruptcy trustee seeking to recover fraudulent transfers could recover direct and indirect loan repayments made after the bank had knowledge of the debtor’s Ponzi scheme, but could not recover deposits not applied to pay back the bank’s debt because the bank was not a “transferee” under the Bankruptcy Code as to ordinary bank deposits.

This week’s TGIF considers a decision of the Victorian Supreme Court which examined the merits of appointing special purpose liquidators in circumstances where a creditor was only willing to fund investigations if the appointment was made.

What happened?

In May and June 2016, two registered education and training organisations (together, the RTOs) were placed into liquidation.

This week’s TGIF considers the application of the principle in Re Universal Distributing and whether liquidators may claim an equitable lien to recover their costs and expenses, even if no assets are realised and no fund exists.

Background

In the recent Court of Appeal decision of Primary Securities Ltd v Willmott Forests Limited, liquidators had been appointed to an insolvent company which was the responsible entity of a managed investment forestry scheme.