The long running question of whether a contractual dispute relating to a breach of a construction contract can be the subject of Adjudication, if one of the parties is in Liquidation, and there are cross claims for insolvency set off was settled by The Supreme Court. Needless to say the two parties both claimed breach of contract and damages. The contract allowed for a dispute to be resolved by Arbitration which the sub-contractor Bresco wished to pursue. This was opposed on the basis of incompatibility between insolvency set-off, and an argument that the adjudicator lacked jurisdiction.

In this case the court was asked to allow the convening of a meeting of creditors to consider and approve a scheme of arrangement by telephone and video conference in view of the Covid-19 pandemic. The meeting was proposed to take place on 20 July 2020 when there was likely to be an easing of the lockdown measure. The court approved the application and made the necessary order.

A similar order was made in a more recent case: Re ColourOz Investment 2 LLC and other companies.

The court held in this case that a costs order in favour of the debtor, in respect of a discontinued bankruptcy petition for the same debt, due to the petitioner, could be set off against the sums due in respect of a second bankruptcy petition brought against the debtor by the same petitioner. The debtor had argued that the petition should be stayed until the previous costs order had been paid.

The case concerned an insolvency practice which had been placed into compulsory liquidation. The Applicants had been appointed liquidators. However, between the presentation of the petition and the winding up order, the assets of the insolvency practice were transferred to another practice, resulting in a claim under section 127 IA86 to declare the transfer void. In addition, the liquidators sought to have transferred to themselves the insolvency cases of the two practitioners of the former practice. The application was by way of the block transfer procedure.

This week’s TGIF takes a look at the recent case of Mills Oakley (a partnership) v Asset HQ Australia Pty Ltd [2019] VSC 98, where the Supreme Court of Victoria found the statutory presumption of insolvency did not arise as there had not been effective service of a statutory demand due to a typographical error in the postal address.

What happened?

This week’s TGIF examines a decision of the Victorian Supreme Court which found that several proofs had been wrongly admitted or rejected, and had correct decisions been made, the company would not have been put into liquidation.

BACKGROUND

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 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 the recent case of Vanguard v Modena [2018] FCA 1461, where the Court ordered a non-party director to pay indemnity costs due to his conduct in opposing winding-up proceedings against his company.

Background

Vanguard served a statutory demand on Modena on 27 September 2017 seeking payment of outstanding “commitment fees” totalling $138,000 which Modena was obliged, but had failed, to repay.

The recent decision of the Court of Appeal of Western Australia, Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (in Liquidation) (Receivers and Managers Appointed) [2018] WASCA 163 provides much needed clarity around the law of set-off. The decision will no doubt help creditors sleep well at night, knowing that when contracting with counterparties that later become insolvent they will not lose their set-off rights for a lack of mutuality where the counterparty has granted security over its assets.