The Supreme Court of Victoria has recently considered whether trust property is subject to the priority regime provided for in section 556 of the Corporations Act 2001 (Cth) (the Australian equivalent of New Zealand's Schedule 7 of the Companies Act 1993).  It also considered whether a trustee's right of indemnity is subject to the obligations of receivers under section 433 of that Act, to pay employee entitlements in priority out of assets subject to a circulating security interest.

The UK case of Cherkasov & Ors v Olegovich, the Official Receiver of Dalnyaya Step concerns an application for security for costs against a liquidator.

A Russian court appointed a liquidator to the Russian subsidiary of a Guernsey unit trust.  The liquidator applied for recognition of the liquidation proceeding as a foreign proceeding in the UK under the Cross-Border Insolvency Regulations 2006.  The application for a recognition order was granted.

The liquidators of a group of companies related to property investor, David Henderson, have recently been ordered to pay a substantial sum for security for costs to the former directors and auditors of the group.  In Walker & Ors v Forbes & Ors the plaintiffs sue the former directors and auditors of the group for alleged breaches of duties.  The proceedings have been allocated a trial of 12 weeks commencing in February 2018.  We reported on disputes over the litigation funding arrangement in this proceeding in an earlier 

In a comprehensive judgment arising out of the collapse of Lehman Brothers, the UK Supreme Court recently determined the ranking of creditors.

Principally, the Court held that Lehman Brothers International (Europe)'s subordinated debt holders were "at the bottom of the waterfall", behind statutory interest and non-provable debt claimants.

All Australian states have sale of goods legislation that, in certain circumstances, allows an unpaid seller to retain possession of goods in transit where the buyer becomes insolvent. The statutory right, called stoppage intransitu, is a useful remedy to obtain payment.

A registered security interest on the PPSR is not required to exercise the statutory right. Administrators and liquidators may be trumped by a notice under the stoppage in transitu provisions.

However, the sale of goods legislation is not identical in each state.

Competing claims to goods are common where there is an unpaid seller with alleged retention of title, the supplier’s customer has gone into external administration and the goods are in the possession of a transport or warehouse provider. Thrown into the mix may be an administrator or liquidator demanding possession of the goods to sell them.

The recent case of M Webster Holdings Pty Limited (administrators appointed) v Specific Freight Pty Limited [2017] FCA 269 illustrates how a transport provider can become ‘the meat in the sandwich’ when a consignee of goods becomes insolvent.

Webster, a fashion retailer, operated two well-known Australian businesses, David Lawrence and Marcs. Webster was placed into administration in February 2017 and its administrators continued to trade with a view to securing a purchaser.

On 23 March 2017, Justice Robson of the Supreme Court of Victoria declined to follow the Victorian Court of Appeal decision of Re Enhill, finding that the decision was not binding with respect to different legislation (the Companies Act 1961 (Vic) as opposed to theCorporations Act 2001 (Cth)).

Background

Since the early 1980s, there has been a divergence of judicial opinion in the decisions of Re EnhillPty Ltd [1983] 1 VR 561 and Re Suco Gold Pty Ltd (in liq) (1983) 33 SASR 99.

On 17 March, in Hambleton v Finn [2017] QDC 61, McGill SC DCJ of the District Court of Queensland applied the section 553C(1) setoff under the Corporations Act 2001 to a liquidator’s insolvent trading claim against a director.

His Honour followed the earlier decision of the District Court of Queensland in Morton v Rexel Electrical Supplies Pty Ltd. In that case, the set-off provision was applied where the liquidator was seeking the recovery of unfair preference payments.

British law firm DWL LLP has acquired insurance specialist Triton Global for the bargain basement price of 30% of its value.  The deal was struck just days before HM Revenue & Customs attempted to wind the firm up over unpaid tax of £1.3m.  Triton Global was a competitor of DWL, but cash flow difficulties left it unable to cover its working capital requirements and service creditor debt.  The deal sees DWL pay £1.1m for Triton Global, with unsecured creditors set to receive less than 4p to the pound.  Of the purchase price, only £174,000 is allocated to the approxima