It is not uncommon for contractors, in several industry sectors, to contract with a special purpose vehicle (SPV), whose day-to-day management is effectively controlled by a parent company, and the SPV has with little to no assets beyond cash flow provided by its parent. In this article we look at what a claimant could do outside of the traditional insolvency process in circumstances where the SPV goes into a form of external administration such as administration or liquidation and there are no assets available to the external administrators.
In the recent decision of Re PBS Building (Qld) Pty Ltd [2024] QSC 108, the Supreme Court of Queensland considered for the first time the operation of the State’s new project and retention trust account regime in the context of an insolvency. The decision provides useful guidance to insolvency practitioners and subcontractors as to their rights in relation to trust accounts established by an insolvent head contractor.
In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three prior Delaware Bankruptcy Court decisions had held that creditors were barred from pursuing such derivative claims by operation of Delaware state law, specifically under the Delaware Limited Liability Company Act (the “DLLCA”).
On June 15, 2023, the United States Supreme Court held that “the Bankruptcy Code unambiguously abrogates the sovereign immunity of all governments, including federally recognized Indian tribes.”1 In other words, Native American Tribes' sovereign immunity does not shield them from suits brought by debtors who declare bankruptcy.
On January 13, 2023, the Supreme Court granted the Lac du Flambeau Band of Lake Superior Chippewa Indians’ Petition for a Writ of Certiorari to resolve the split of circuits on whether Section 106 of the Bankruptcy Code evinces Congress’ unequivocal intent to abrogate Native American Tribes’ sovereign immunity.1
Deepening a split of circuits, the First Circuit Court of Appeals held that the Bankruptcy Code waived the sovereign immunity of Native American Tribes. The May 6, 2022 opinion by Judge Sandra L.
The High Court of Australia’s decision in Wells Fargo Trust Company, National Association (as Owner Trustee) & Anor v VB Leaseco Pty Ltd (Administrators Appointed) & Ors (the “Willis” case).
On Wednesday, 16 March 2022, the High Court of Australia handed down its decision in the Willis case.
On the 2 August 2021 Treasury released a consultation paper titled ‘Helping Companies Restructure by Improving Schemes of Arrangement. The consultation is aimed at reforming Australia’s scheme of arrangement procedure.
Background
Insolvency relief extended to 31 December 2020
On Sunday, the Federal Government announced that it will extend until the end of the year insolvency relief measures which were put in place from March 2020 as part of its response to the COVID-19 pandemic which were due to expire on 25 September 2020.[1]