A few reactions to today’s oral arguments before the U.S. Court of Appeals for the First Circuit regarding the validity of Puerto Rico’s Recovery Act:
Background
Coin Co International PLC (Administrators Appointed) (Coin Co) was a company incorporated in the UK which conducted a cash services business in the UK and a global currency exchange business in various countries, including Australia.
WHAT HAPPENED?
On 4 February 2013, Stansfield DIY Wealth Pty Ltd (in liquidation) was wound up, and a liquidator was appointed. At that time, the only function of the company was acting as trustee of a self-managed superannuation fund. It had no assets or liabilities, save in its capacity as trustee of the super fund.
BACKGROUND
Mr Featherstone was recorded as director of Ashala Pty Ltd (Ashala) from 10 March 2004 to 7 October 2005 and from 28 November 2005 to 12 December 2005. Ashala occupied premises which Mr Featherstone owned as trustee for his family trust.
On 7 October 2005, Mr Featherstone agreed to transfer his shares in Ashala and two other related companies to Ms Kristy Marks and for Ms Marks to become the sole director of the three companies. This agreement was recorded in an “agreement letter” and ASIC was notified accordingly.
“The question that he frames in all but words
Is what to make of a diminished thing.”
Robert Frost, “The Oven Bird”
At the end of “The Candidate”, Robert Redford’s title character, having won, famously asks, “What do we do now?”
A similar question can be asked now that the federal district court in Puerto Rico has struck down the Puerto Rico Public Corporation Debt Enforcement and Recovery Act.
In the aftermath of recent municipal bankruptcies in which issuers proposed and/or implemented bankruptcy plans involving partial discharges of the issuer’s payment obligation on insured bonds, there has been increased focus on whether municipal bond interest paid by a bond insurer after the bankruptcy plan’s effective date continues to be tax-exempt.
The Federal Court has recently handed down a decision that clarifies the power of receivers to administer trust property under a debenture. In Benton, in the matter of Mackay Rural Pty Ltd (Receivers and Managers Appointed) [2014] FCA 1285, the Federal Court confirmed that section 420 of the Corporations Act 2001 (“the Act”) confers upon receivers a power to dispose of trust property, provided that this is necessary for the purpose for which they have been appointed.
FACTS
The Supreme Court of Western Australia recently handed down its decision in Soil and Contracting Pty Ltd v Boban Pty Ltd [2014] WASC 402 which confirmed that, notwithstanding the operation of s 459R of the Corporations Act, the slip rule is available to extend the time limit within which a winding up application may be determined.
SECTION 459R
Connections Total Fitness for the Family Pty Limited (Connections) operated a gym on premises owned by Selkirk Pastoral Co Pty Limited (Selkirk). The gym business ultimately failed and ceased trading when administrators were appointed on 4 October 2013. Connections’ assets were limited to some cash at bank and a $1.1m claim against Selkirk.