The "running account" defence to an unfair preference claim is a fragile flower. In a recent decision, the Queensland Court of Appeal has reminded solvent counterparties that suspension of a customer's trading account will probably break the "running account", exposing a solvent counterparty to greater unfair preference risk.
Need to know
A recent decision of the NSW Court of Appeal demonstrates the importance for security trustees tocarefully consider and understand their obligations in an enforcement scenario.
Need to know
The reform agenda for Australia's restructuring and insolvency regime has now received the views of the Productivity Commission, in the context of its wider review of Business Set-Up, Transfer and Closure. A draft report published on 21 May 2015 sets out a number of recommendations that, while mostly not new to the reform agenda, will be relevant to restructuring and insolvency professionals in the not-too-distant future.
Need to know
In a first for the US and Australian markets, the Buccaneer Energy group of companies successfully had bankruptcy plans approved by the US Bankruptcy Court for both US and Australian incorporated debtor companies.
"Once in a generation" review
Shortly before the Christmas break, the much anticipated review of the United States "Chapter 11 bankruptcy" regime was published by the American Bankruptcy Institute (ABI). This is one of very few such major "root and branch" reviews of Chapter 11 since its enactment in 1978, and the first since the 1990s.
On 25 July 2014 and 17 September 2014 respectively, Justice Brereton of the Supreme Court of NSW delivered two related judgments in Re AAA Financial Intelligence Ltd (in liquidation) andRe AAA Financial Intelligence Ltd (in liquidation) (No 2). The decisions deal with the evergreen topic of Liquidator remuneration and expenses.
Importantly, in fixing the Liquidators' remuneration, Justice Brereton adopted a "value" focussed approach, and discussed the relevance of considering matters beyond simply time spent multiplied by fixed hourly rates.
Since BP Australia Pty Ltd v Brown, there has been a practice of Courts across Australia granting "shelf orders", whereby time for voidable transaction recovery actions by a Liquidator under section 588FF is extended "at large". The Court's power to grant these "shelf orders", however, is to be scrutinised by the High Court in December 2014, in the course of the Octaviar group liquidation.
Odd as it may seem, you have to plough through 122 sections of the UK Insolvency Act 1986 (the “Act”) before you finally reach the section that sets out the criteria for establishing insolvency. Section 123 of the Act lists a series of circumstances under which a company may be deemed insolvent. Some of these circumstances are factual—for example, owing a debt of more than £750 for more than 21 days after a demand for payment—but two rely on a legal test of company insolvency.
In a much-awaited judgment, the UK Supreme Court has decided that the liability of a company in administration or liquidation to contribute to an under-funded pension fund following a Financial Support Direction or a Contribution Notice is a provable debt ranking equally with other unsecured creditors. Crucially, it is not an expense of the administration or liquidation which would cause it to rank ahead of all creditors (except fixed charge holders) and even the administrator's or liquidator's own remuneration.