On 24 December 2020, the Federal Court of Australia published reasons for a decision in which I appeared for the liquidators of two related companies, Bestjet Travel Pty Ltd (in liq) and Wynyard Travel Pty Ltd (in liq). The decision can be accessed here.
As part of the its efforts to stem the effects of the COVID-19 pandemic on the Australian economy, the Federal Government has recently introduced a number of ‘safety net’ provisions designed to avoid financially distressed individuals and companies being forced into, respectively, bankruptcy and liquidation.
The objective is to allow them to continue trading where possible.
The reforms
The Victorian Court of Appeal decides that the Corporations Act priority regime does apply to trading trusts.
The law is now clear. Or is it?
For the last two years and six days, insolvency practitioners and other stakeholders involved in the liquidation of trading trusts have been frustrated by what should be a very straightforward question.
If the company in liquidation carries on business through a trust structure, as many do, what is the order of priorities that the liquidator must apply when making distributions to creditors?
On 28 March 2017, the Federal Government released draft reform legislation to Australia’s insolvency laws to promote a culture of entrepreneurship and help reduce the stigma associated with business failure.
The reforms, known as ‘safe-harbour’ provisions propose changes to directors’ personal liability for insolvent trading under the Corporations Act 2001 (Cth) (Act).
Background
“[C]ourts may account for hypothetical preference actions within a hypothetical [C]hapter 7 liquidation” to hold a defendant bank (“Bank”) liable for a payment it received within 90 days of a debtor’s bankruptcy, held the U.S. Court of Appeals for the Ninth Circuit on March 7, 2017.In re Tenderloin Health, 2017 U.S. App. LEXIS 4008, *4 (9th Cir. March 7, 2017).
The Federal Rules of Bankruptcy Procedure (“Bankruptcy Rules”) require each corporate party in an adversary proceeding (i.e., a bankruptcy court suit) to file a statement identifying the holders of “10% or more” of the party’s equity interests. Fed. R. Bankr. P. 7007.1(a). Bankruptcy Judge Martin Glenn, relying on another local Bankruptcy Rule (Bankr. S.D.N.Y. R.
A Chapter 11 debtor “cannot nullify a preexisting obligation in a loan agreement to pay post-default interest solely by proposing a cure,” held a split panel of the U.S. Court of Appeals for the Ninth Circuit on Nov. 4, 2016. In re New Investments Inc., 2016 WL 6543520, *3 (9th Cir. Nov. 4, 2016) (2-1).
On 23 February 2016, Justice Brereton in the New South Wales Supreme Court handed down the decision in the matter ofIndependent Contractor Services (Aust) Pty Ltd ACN 119 186 971 (in liquidation) (No 2) [2016] NSWSC 106.
This is an important judgment, with significant consequences for the insolvency community.
The decision deals with two fundamental aspects of insolvency law, being:
While a recent federal bankruptcy court ruling provides some clarity as to how midstream gathering agreements may be treated in Chapter 11 cases involving oil and gas exploration and production companies (“E&Ps”), there are still many questions that remain. This Alert analyzes and answers 10 important questions raised by the In re Sabine Oil & Gas Corporation decision of March 8, 2016.[1]
An asset purchaser’s payments into segregated accounts for the benefit of general unsecured creditors and professionals employed by the debtor (i.e., the seller) and its creditors’ committee, made in connection with the purchase of all of the debtor’s assets, are not property of the debtor’s estate or available for distribution to creditors according to the U.S. Court of Appeals for the Third Circuit — even when some of the segregated accounts were listed as consideration in the governing asset purchase agreement. ICL Holding Company, Inc., et al. v.