The Queensland Court of Appeal has unanimously allowed an appeal by the liquidators of Linc Energy Limited (Linc Energy), holding it was possible to use a disclaimer notice to avoid the consequences of an environmental protection order (EPO) issued under the Environmental Protection Act 1994 (Qld) (EPA).

Introduction – why does this matter?

The High Court delivered a stark reminder to personal insolvency practitioners (PIPs) that they serve an integral role in upholding the legitimacy of the bankruptcy process in a judgment delivered on 5 February 2018.

Background

The judgment arose out of an application by the Official Assignee (“OA”) to postpose the automatic discharge of a bankrupt. The OA submitted that the bankrupt had hidden assets from or failed to disclose assets which could have been realised for the benefit of the creditors of her estate.

Since the landmark decision in Re Solfire Pty Ltd (In Liq) (No. 2) [1999] 2 Qd R 182, the Queensland Supreme Court has often marched to its own tune when reviewing applications for insolvency practitioner remuneration and disbursements. In two related decisions arising from the insolvency of LM Investment Management and managed investment schemes of which it is responsible entity, the Court has now turned its attention to the controversies in this area over proportionality and access to trust assets with which its counterparts in New South Wales have grappled over the last 18 months.

In a series of recent decisions1, the Federal Court of Australia has held that section 588FL of the Corporations Act 2001 (Cth) (Corporations Act) operates such that any new security granted by a company in external administration2. that could only be perfected by registration on the Personal Property Securities Register (PPSR), and which is not the subject of an effective registration made before the appointment of the external administrator, will be ineffective3.

Yesterday in Canberra, a significant step forward for Australian insolvency law reform was taken: Parliament passed the much anticipated "safe harbor" for directors in relation to insolvent trading liability and moratorium on reliance by solvent counterparties on “ipso facto” clauses in voluntary administration and creditors schemes of arrangement.

Key Points

On the key points:

In a wide-reaching judgment concerning an appeal by Mighty River International in the administration of Mesa Minerals, the Western Australian Court of Appeal, has recognised that “holding” Deed of Company Arrangement (DOCA) is permissible under Part 5.3A of the Corporations Act.

The key points – Holding DOCAs as a flexible framework

The key points for insolvency and turnaround professionals to take from Mighty River International v Hughes are:

In a decision of importance for liquidators and litigation funders, the Western Australian Court of Appeal in Perrine v Carrello has further explained the important issue of how to determine the amount of compensation recoverable by liquidators where insolvent trading has occurred.

In a wide-reaching judgment concerning an appeal by Mighty River International in the administration of Mesa Minerals, the Western Australian Court of Appeal has recognised that a "holding" Deed of Company Arrangement (DOCA) is permissible under Part 5.3A of the Corporations Act.

The key points - Holding DOCAs as a flexible framework

The key points for insolvency and turnaround professionals to take from Mighty River International v. Hughes are:

Introduction

On 29 June 2017 the High Court made an order for costs against the three former directors of Custom House Capital (the “Company”) having already disqualified them from acting as directors for periods in excess of ten years. The judgment was unusual because the order for costs was not just in relation to the legal costs but also for the very significant investigative costs of the Official Liquidator.

Background