The High Court recently issued its ruling in the matter of Re Avanti Communications Limited (in administration). It is the first major case since the pivotal 2005 House of Lords decision of Re Spectrum Plus to examine the characteristics of fixed and floating charges.
Key points
In the current times of financial stress, a borrower seeking to renegotiate or refinance existing financing arrangements may be asked by its lender to enhance or refresh its security package through the grant of a new floating charge.
The question of whether a floating charge can be avoided due to section 245 of the Insolvency Act 1986 ("IA 1986") can arise in such a context.
Void floating charges under section 245 of the IA 1986
The issue
A "no action" clause will appear in almost all English law-governed bond trust deeds.
A no action clause provides that a bondholder (or anyone entitled to payments on the bonds) cannot, initially, proceed directly against the issuer. Instead, the right to bring a cause of action resides with the trustee and it is only if the trustee, having become bound to take action, fails to do so within a reasonable time (with the failure continuing) that a bondholder can then itself proceed directly against the issuer.
The High Court has, for the first time since the introduction of the legislation in June 2020, refused to sanction a cross-class cram-down restructuring plan under Part 26A of the Companies Act. In In the matter of Hurricane Energy Plc [2021] EWHC 1759 (Ch), the court rejected a plan supported by bondholders because it had not been shown that the opposing shareholders had no better alternative prospects (i.e., the ‘no worse off condition’ had not been met).
This week’s TGIF considers a recent case where the Supreme Court of Queensland rejected a director’s application to access an executory contract of sale entered into by receivers and managers on the basis it was not a ‘financial record’
Key Takeaways
This week’s TGIF looks at the decision of the Federal Court of Australia in Donoghue v Russells (A Firm)[2021] FCA 798 in which Mr Donoghue appealed a decision to make a sequestration order which was premised on him ‘carrying on business in Australia' for the purpose of section 43(1)(b)(iii) of the Bankruptcy Act 1966 (Cth) (Act).
Key Takeaways
This week’s TGIF considers an application to the Federal Court for the private hearing of a public examination where separate criminal proceedings were also on foot.
Key takeaways
This week’s TGIF looks at a recent decision of the Victorian Supreme Court, where a winding up application was adjourned to allow the debtor company to pursue restructuring under the recently introduced small business restructuring reforms.
Key takeaways
Introduction
Towards the end of 2020, while businesses were reeling from the challenges of grappling with a global pandemic, the end of the Brexit transition period and LIBOR transition, the Law Commission published a paper analysing the current law underlying intermediated securities - Intermediated securities: who owns your shares? A Scoping Paper.
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?