The Privy Council endorsed the Commercial Court's approach in the British Virgin Islands (BVI) in staying insolvency proceedings, even when faced with a pre-existing arbitration agreement, only when a debt is genuinely disputed on substantial grounds.
Introduction
In a recent case, the Victorian Supreme Court said that an accountant ‘would know well that a statutory demand involves strict time frames for response and potentially very significant consequences for a company’. The accountant failed to take appropriate steps to inform the company of the statutory demand.
The statutory demand process
If a company does not comply with a statutory demand within 21 days of service, it is deemed to be insolvent and the creditor may proceed to wind up the company.
A recent court decision considers the legal principles and sufficiency of evidence when a court-appointed receiver seeks approval of their remuneration.
A court-appointed receiver needs court approval for the payment of their remuneration. The receiver has the onus of establishing the reasonableness of the work performed and of the remuneration sought.
The recent ex-tempore judgment of Kawaley J in Atom Holdings1 in the Grand Court of the Cayman Islands serves as a timely reminder to practitioners and industry participants alike that obtaining an adjournment of a winding-up petition2 requires cogent evidence demonstrating good reason(s) for delaying what is otherwise the collective right of creditors to seek relief via court intervention.
The Eastern Caribbean Supreme Court of Appeal has dismissed an application to stay the appointment of liquidators pending the outcome of an appeal against a landmark first instance decision by the BVI Commercial Court, in which it was determined that ultimate beneficial interest holders of notes are 'creditors' under the BVI Insolvency Act and so have standing to issue liquidation applications against defaulting note issuers.
Background
In a landmark decision, the BVI Commercial Court has confirmed that ultimate beneficial interest holders of notes are 'creditors' under the BVI Insolvency Act and so have standing to issue liquidation applications against defaulting note issuers.
Mourant Ozannes, working alongside Ashurst (Hong Kong) and Counsel, Peter Burgess of South Square, has secured a landmark decision in the matter of Cithara Global Multi-Strategy SPC (Cithara) v Haimen Zhongnan Investment Development (International) Co Ltd (the Company).
A Supreme Court in Australia has dismissed an application by a UK company’s moratorium restructuring practitioners for recognition of a UK moratorium and ordered that the company be wound up under Australian law.
The decision provides insights into the interaction between cross-border insolvencies and the winding up in Australia of foreign companies under Australian law.
Introduction
In the matter of Hydrodec Group Plc [2021] NSWSC 755, delivered 24 June 2021, the New South Wales Supreme Court:
It is possible for a trustee in bankruptcy to make a claim to property held by a bankrupt on trust. For example, by lodging a caveat over a home that is held on trust.
A trustee in bankruptcy may be able to make a claim, relying on the bankrupt’s right of indemnity as trustee of the trust. This is because the bankrupt’s right of indemnity, as trustee, is itself property that vests in the trustee in bankruptcy under the Bankruptcy Act 1966.
Explaining a trustee’s right of indemnity
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.