A 139ZQ notice issued by the Official Receiver is a powerful tool for trustees in bankruptcy seeking to recover a benefit received by a third party from an alleged void transaction. These include transactions such as an unfair preference, an undervalued transaction, or a transaction to defeat creditors.

Given the adverse consequences for noncompliance, a recipient of a 139ZQ notice should take it seriously and obtain legal advice without delay.

Section 139ZQ notices

Section 561 of the Corporations Act 2001 (Cth) provides that accrued employee entitlements must be paid in priority to the holder of a circulating security interest in a winding up.

Until recently, it was unresolved whether the property subject to a circulating security interest should be determined as at the date the liquidation began, on a continuous basis, or at some other unidentified date.

The High Court, in Quinn v Toon [2020] NZHC 816, confirmed that only the reasonable costs of the liquidators will be recoverable.

Ms Toon applied for orders under ss 276 and 278 of the Companies Act 1993 to approve her remuneration claiming $101,729 plus GST and expenses for her work as the liquidator of Investacorp Holdings Ltd.

This was a solvent liquidation.  While there were no creditors, there were disputes between shareholders that Ms Toon spent a considerable amount of time investigating.

In our December 2019 newsletter we commented that the Madoff bankruptcy had one more big case to go, chasing USD3.2b held by foreign banks.  The US Supreme Court has just refused to hear an application by major banks and companies, including Koch Industries Inc, to prevent Mr Picard, the bankruptcy trustee, from pursuing claims aimed at recouping funds that were transferred overseas.  In the meantime, Mr Madoff has been refused early

A Singaporean Court in Anan Group (Singapore) PTE Ltd v VTB Bank (Public Joint Stock Company) [2020] SGCA 33 has recently confirmed the Court’s approach in assessing arbitration clauses when an application has been brought to put a company into liquidation. 

The parties in this case are parties to an arbitration agreement.  The respondent applied to put the appellant into liquidation.  The Court considered that the winding up proceeding should be stayed with the underlying dispute to be resolved through arbitration.

The English High Court ruled that prospective emergency legislation to amend insolvency laws due to the COVID-19 pandemic could not prevent liquidation proceedings from being brought.  In Shorts Gardens LLP v London Borough of Camden Council [2020] EWHC 1001 (Ch) applications were made by two companies to restrain local councils from bringing liquidation proceedings in respect of unpaid rates and costs orders.

In our April newsletter, we noted that the UK Government had announced proposed changes to insolvency laws.  On 20 May 2020, the Corporate Insolvency and Governance Bill (UK) was introduced.  The proposed reforms include:

The Government has passed an omnibus bill which introduced amendments that will assist New Zealand to respond to the wide-ranging effects of COVID-19.

In brief the changes to insolvency legislation are:

In Re A Company (injunction to restrain presentation of petition) [2020] EWHC 1406 (Ch), the Court held that it is able to take into account the likelihood of a change in the relevant law in deciding whether to restrain a winding up application from being brought.

The English Court of Appeal in Re Debenhams Retail Ltd [2020] EWCA Civ 600 recently considered the inter-relationship between the UK Government’s Coronavirus Job Retention Scheme and the ‘adoption’ of employment contacts by administrators under the Insolvency Act 1986.  The issue was whether by paying only the amounts which may be claimed under the Scheme to furloughed employees, the administrators have adopted the contracts.  Adoption means that the wages and other entitlements are payable as expenses of the administration ahead of other expenses.