A Members Voluntary Liquidation ("MVL") is a process undertaken by a solvent company to wind up its affairs in an orderly manner when the company has concluded its activities and the shareholders wish to distribute the remaining assets amongst themselves.
To avail of a MVL, the company must be solvent i.e. the directors must be able to execute a statutory declaration that they are of the opinion that the company will be able to pay its debts in full within 12 months of the commencement of the winding up.
The steps involved
After much anticipation, the UK Supreme Court has handed down its judgment in BTI 2014 LLC v Sequana S.A. [2022] UKSC 25 - and has authoritatively set the baseline for how directors’ duties evolve as regards shareholders and creditors’ interests when a company is in the zone of insolvency.
Background
As another Irish Court year will soon commence, now is an opportune time to look back at some of the more interesting insolvency and restructuring judgments to have been delivered in the Superior Courts during the last 12 months.
The judgments explored below will prove of relevance and importance to practitioners and clients navigating distressed corporates and assets over the coming weeks and years. Please do get in touch with your Walkers Ireland Insolvency and Dispute Resolution contact or any of the contacts listed below with any comments or queries.
The Irish Government has published the details of a new 'out-of-court' rescue process for small companies, the Small Company Administrative Rescue Process or 'SCARP'. The process seeks to borrow some features from the well-established examinership rescue process, but with one fundamental difference, being the limited role of the Irish courts proposed for SCARP. The relative high cost of examinership for smaller companies has historically been found to be a barrier for entry.
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 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.
This week’s TGIF considers the decision in Mujkic Family Company Pty Ltd v Clarke & Gee Pty Ltd [2018] TASFC 4, which concerns a rather novel issue – whether a solicitor acting for a shareholder might also owe a duty of care to the company in liquidation.
What happened?
In 2015, the Supreme Court of Queensland ordered that the corporate trustee of a family trust be wound up.