In the recent case of 1st Fleet Pty Ltd (in liquidation), the Court clarified the information disclosure obligations of external administrators in the Insolvency Practice Schedule (Corporations) (IPSC) and Insolvency Practice Rules (Corporations) 2016 (Rules).

There is only a short time period for compliance, and there can be cost consequences for non compliance.

In business it is not uncommon for a director of a company to be owed money by that company.

If the commercial relationship breaks down, the director may think it is an option to serve a creditor’s statutory demand on the debtor company.

However, recent court decisions demonstrate that issuing a creditor’s statutory demand is not a sure fire method of obtaining payment where the director is owed the debt personally or is a director of both the creditor and debtor companies.

Cases where statutory demands have been successfully challenged

All three institutions of the European Union have now approved the EU Preventive Restructuring Framework Directive. This is the EU's first attempt to "harmonise" insolvency laws across the Member States, that have disparate existing legislation. What does the Directive do and what will be its effect in practice?

The Directive

Sports Direct International plc's last-minute offer to buy substantially all of the assets of House of Fraser out of administration is the latest example of a pre-packaged administration being used to rescue a failing business and continue it as a going concern.

The House of Fraser pre-pack sale to Sports Direct, the British retail group headed by Mike Ashley, was announced almost immediately after House of Fraser entered into administration, and included a transfer of its UK stores, the brand and all of its stock and employees.

The UK and the US have historically been perceived as leading jurisdictions in the development of restructuring and insolvency law – to the extent that dozens of local insolvency regimes around the world have been modelled on some combination of their processes. Both regimes are highly sophisticated, and feature well-developed legislation supported by decades of case law that offers both debtors and creditors alike a degree of certainty and predictability that is not always available in other jurisdictions.

The Company Voluntary Arrangement (‘CVA’) was introduced into English insolvency law by the Insolvency Act 1986 (the ‘IA 1986’), as a result of recommendations made in the Cork Report1 in 1982.

In the recent court decision of Trenfield v HAG Import Corporation (Australia) Pty Ltd [2018] QDC 107, the liquidators recovered unfair preferences from a retention of title creditor who argued it was a secured creditor.

The issues

In the recent decision of Heavy Plant Leasing [2018] NSWSC 707, a creditor successfully defended an unfair preference claim by establishing it did not have reasonable grounds to suspect the insolvency of the debtor company, who was a subcontractor in the earth moving business.

The most common way of defending a liquidator’s unfair preferences claim is to rely upon section 588FG(2) of the Corporations Act 2001(Cth); commonly called the ‘good faith defence’.

Commonly, a creditor being sued by a liquidator to refund an alleged unfair preference is owed money by the company in liquidation.

Liquidators argue that under section 553(c)(1) of the Corporations Act 2001 (Act) a creditor is not able to set-off the outstanding indebtedness owed by the company to the creditor to reduce any liability of the creditor to refund any unfair preference. Similar arguments are made by liquidators in relation to insolvent trading claims.

A snapshot of the court decisions

With miserable Christmas trading figures exacerbating an already challenging climate for UK retailers, a growing number of companies are turning to company voluntary arrangements ("CVAs") as a possible source of respite. Most commonly used by retailers and other UK companies to impose improved lease terms on their landlords, CVAs look set to come back into fashion.

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