The recent judgment in City Gardens Ltd v DOK82 Ltd [2023] EWHC 1149 (Ch) serves as a useful reminder of the extent of, and principles governing, the English court’s jurisdiction to wind up a company on the basis of inability to pay its debts.

Background

City Gardens Limited (C), and DOK82 Ltd (D), had entered into a “memorandum of understanding” (MoU) in relation to a significant debt owed by D to C.

In Re Brew Still Pty Ltd (admin apptd)[2023] NSWSC 256, Black J of the New South Wales Supreme Court declined an application for an adjournment of one month brought by the voluntary administrator appointed to Brew Still Pty Ltd three days prior to the hearing of the winding up application.

In Re Scherzade Khilji (in bankruptcy) the court provided useful guidance on when the three-year "use it or lose it" limitation period to realise a bankrupt’s primary place of residence (provided by section 283A of the Insolvency Act 1986) commences.

Background

This case concerns the property interests of Ms Scherzade Khilji (Ms Khilji), who was declared bankrupt on 2 July 2018. Her trustee in bankruptcy was appointed on 7 August 2018 (the trustee).

The decisions in Metal Manufactures Pty Limited v Morton [2023] HCA 1 and Bryant v Badenoch Integrated Logging Pty Ltd [2023] HCA 2 have been viewed as conflicting for liquidators. In this week’s TGIF, we examine these proceedings and why the decisions benefit both liquidators and creditors.

Key takeaways

Amidst the cost of living crisis, businesses are folding in record numbers, with barely a week passing without news of a big company casualty. Paperchase is the latest retailer to collapse into administration, with the business being snapped up by Tesco for sale in its superstores and 820 jobs reportedly at risk. So how can we identify the businesses that are in the danger zone and could be heading for insolvency?

1. Profit warnings

In Lawrence, Ozifin Tech Pty Ltd (in liq) v AGM Markets Pty Ltd (in liq)[2022] FCA 1478, liquidators of multiple companies were successful in obtaining the declarations and directions they sought regarding the distribution of statutory trust funds, and obtaining payment of their fees from trust assets.

In the recent decision of Banerjee (Liquidator), in the matter of Eastside Formwork Pty Ltd (in liq) v Stojic [2022] FCA 1315, a liquidator succeeded in obtaining orders for a warrant to search for and seize books and records which had been concealed from the liquidator. The warrant was directed at the person deemed the ‘guiding mind and will’ of the company in liquidation, who had repeatedly ‘fobbed off’ requests for the production of all records of the company.

Key takeaways

With rising insolvency rates, driven in particular by the number of creditors’ voluntary liquidations reaching record highs, the decision in the recent Court of Appeal case of PSV 1982 Limited v Langdon [2022] EWCA Civ 1319 serves as a timely reminder for directors of the personal risks involved in re-using the name of a liquidated company.

In a recent decision handed down in Gold Valley Iron Pty Ltd (in liq) v OPS Screening & Crushing Equipment Pty Ltd [2022] WASCA 134, Liquidators succeeded in establishing an ‘equipment lease with an option to purchase’ clause as being a security interest under the Personal Property Securities Act 2009 which needed to be registered by the owner.

Key takeaways

The High Court has held an original tenant and guarantor of a lease liable for unpaid sums due where the new tenant had compromised its liabilities under the lease pursuant to a restructuring plan under Part 26A of the Companies Act 2006 (CA 2006). Read on for our analysis of Oceanfill Limited v Nuffield Health Wellbeing Limited and Cannons Group Limited [2022] EWHC 2178 (Ch).

The lease and licence to assign