Two recent Supreme Court of Canada decisions demonstrate that the corporate attribution doctrine is not a one-size-fits-all approach.

Restructuring Plans: should an opposing creditor be granted security for costs? Might that open the floodgates where companies are by definition “distressed,” or was this particular Plan more akin to ordinary adversarial litigation? Read our summary below.

Court approval of a sale process in receivership or Bankruptcy and Insolvency Act (“BIA”) proposal proceedings is generally a procedural order and objectors do not have an appeal as of right; they must seek leave and meet a high test in order obtain it. However, in Peakhill Capital Inc. v.

The judgment of Adam Johnson J in Re Great Annual Savings Company Ltd, (Re Companies Act 2006) [2023] EWHC 1141 (Ch) demonstrates again the rigorous approach the courts are taking in relation to the fulfilment of the conditions required to “cram down” dissenting creditors in restructuring plans as well as in the exercise of the court’s discretion to sanction them.

NGI Systems & Solutions Ltd v The Good Box Co Labs Ltd [2023] EWHC 274 (Ch) records the court’s reasons for sanctioning a restructuring plan made between the defendant company, The Good Box Co Labs Limited, its members, and separate classes of its creditors pursuant to section 901F Companies Act 2006. It also deals with other matters arising out of the company’s administration.

Despite the “elegance” of the arguments challenging  the calling of creditors’ meetings on behalf of the former CEO, who argued that the rights of “B” shareholders including himself, would be adversely affected, Trower J found that as neither the contractual terms of the rights themselves nor their economic value would be affected by the plans, he would order calling of the meetings under section 901C(3) Companies Act 2006. There was no real change to the economic value for the B shareholders.  

Introduction

The concept of winding up does not exclusively apply to insolvent companies. Solvent companies can also be wound up, on the initiation of the company’s directors and shareholders (for example, as part of a corporate reconstruction or to close down non-operating or redundant entities). 

An overview of the two key procedures to effect the dissolution of a solvent Australian company, being Members’ Voluntary Liquidation and Deregistration, is set out below. 

In brief

Even with the fiscal stimulus and other measures taken by the Federal and State governments in Australia, corporate insolvencies are likely to increase in coming months.

Under Australia's insolvency regimes, a distressed company may be subject to voluntary administration, creditor's voluntary winding up or court ordered winding up (collectively, an external administration). Each of these processes raises different issues for the commencement and continuation of court and arbitration proceedings.

In summary

In our previous alert we discussed how Justice Markovic in the Federal Court of Australia had granted the administrators of retailer Colette Group relief from personal liability for rent in respect of 93 stores.  

The Australian Federal Court has made orders relieving the administrators of retailer Colette from personal liability for rent in response to the COVID-19 crisis and the current uncertainty in respect of government policy about rent relief for tenants: see

What you need to know