In Australia, public companies are required to have at least three directors (s 201A(2) of the Corporations Act 2001 (Cth) (Act)). However, in exceptional circumstances, a public company might find itself with fewer than three directors – for example, where the other board directors resign because of some disagreement.

The peak indebtedness rule employed by liquidators to maximise recovery of unfair preference claims is abolished

This was first published in the LexisNexis Insolvency Law Bulletin (Vol. 21, No. 5 & 6).

This article is co-authored by Justin Ward of Litigation Capital Management and Marcel Fernandes of 12 Wentworth Selborne Chambers.

Background

The plaintiff was the primary trading entity within a larger group of companies which operated a development and construction business.

The liquidation of the group was complex, with a significant number of claims identified as requiring investigation. Further, ASIC’s allegations of serious misconduct resulted in a significant amount of the liquidator’s time being allocated to assisting ASIC with its investigation.

Problem

This article was originally published in the Australian Restructuring, Insolvency & Turnaround Association Journal (Volume 32 #01 2020)

The first of March marked the second anniversary of the changes to the Corporations Act 2001 (Cth) (Act) permitting an external administrator to assign rights to sue. The Australian Government proposed the reform in the hope that the ‘sale of rights of action may enable the value in such rights to be realised’[1].

The United Kingdom and Australia have recently implemented legislative changes to permit external administrators to assign or sell causes of action available to them.

A recent case in the NSW Court of Appeal clarifies the purpose, and limits, of a public examination summons

The PAS Group decision reaffirms the principle that rent incurred during the administration period takes priority in the winding-up payment waterfall

Antqip Hire highlights the importance of drafting a DOCA carefully, and properly communicating to creditors the commercial risks

The case of Antqip Hire was brought by the liquidators of two related entities (Antqip Pty Limited and Antqip Hire Pty Limited).

Orders were sought determining:

A voluntary administrator is often appointed by the company. The directors have a role in selecting the administrator; often the referral will come through one of the company’s advisers, such as the accountant or lawyer.