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Liquidator's remuneration vs employee creditors: who gets priority to circulating assets?

Commonwealth of Australia v Tonks [2023] NSWCA 285

In this decision, the Court of Appeal of the Supreme Court of NSW considered the interplay between the priority regimes under ss 556 and 561 of the Corporations Act 2001 (Cth) (Act) in resolving a contest between a liquidator’s claim for remuneration and the entitlements of former employees to be paid out of circulating assets.

The Court of Appeal confirmed the first instance decision of Justice Black in finding that:

Australia, Insolvency & Restructuring, Litigation, Johnson Winter Slattery, Corporations Act 2001 (Australia)
Present solvency and future debt: the relevance of future debt in determining solvency

Australia, Company & Commercial, Insolvency & Restructuring, Litigation, Johnson Winter Slattery, Corporations Act 2001 (Australia), New South Wales Court of Appeal
No more s 588FL vesting for security interests granted post appointment: Cubic Interiors NSW & Ors

A decision which insolvency practitioners will welcome in, Cathro, in the matter of Cubic Interiors NSW Pty Ltd (In Liq) [2023] FCA 694, the Federal Court clarified that s588FL of the Corporations Act 2001 (Cth) (the Act) does not cover security interests granted by a security agreement made after the “critical time” as defined in s588FL(7) of the Act.

Australia, Insolvency & Restructuring, Litigation, Johnson Winter Slattery, Liquidation, Financial Conduct Authority (UK), National Australia Bank, Corporations Act 2001 (Australia)
A tip for liquidators of insolvent corporate trustees: appoint a receiver

How should the liquidator of an insolvent trustee company ensure payment out of trust assets of the entirety of his or her remuneration and expenses?

Australia, Insolvency & Restructuring, Litigation, Johnson Winter Slattery
District Court adopts subjective good faith defense for fraudulent transfer claims in SIPA case

The U.S. District Court for the Southern District of New York, on April 27, 2014, issued a decision directing the bankruptcy court to dismiss fraudulent transfer complaints brought by the Madoff Securities Investor Protection Act of 1970 (“SIPA”) trustee against investment funds, their customers and individuals when the trustee failed “plausibly [to] allege that defendant[s] did not act in good faith.” SIPC v. Bernard L. Madoff Inv. Sec. LLC, 2014 WL 1651952, at *5 (S.D.N.Y. April 27, 2014).

USA, New York, Capital Markets, Insolvency & Restructuring, Litigation, White Collar Crime, Schulte Roth & Zabel LLP, Good faith, United States bankruptcy court, US District Court for the Southern District of New York
Delaware Bankruptcy Court grants Chapter 15 protection over U.S. assets of Cayman Islands fund in liquidation

In a recent decision, the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) granted protection over the U.S. assets of a Cayman Islands exempted company in liquidation. See Revised Order Recognizing Foreign Proceeding (the “Order”), In re Saad Investments Finance Company (No.5) Limited (“SIFCO5”), Case No. 09-13985 (KG) (Bankr. D. Del. Dec. 17, 2009) (Docket No. 47). The company, SIFCO5, is subject to official liquidation proceedings in the Cayman Islands, which the Bankruptcy Court found was eligible for relief under chapter 15 of the U.S.

Cayman Islands, USA, Delaware, Insolvency & Restructuring, Litigation, Private Client & Offshore Services, Schulte Roth & Zabel LLP, Debtor, Privately held company, Hedge funds, Limited partnership, Liquidation, Investment company, Liquidator (law), Barclays, Bear Stearns, US Code, Title 11 of the US Code, United States bankruptcy court, US District Court for District of Delaware, US District Court for the Southern District of New York