Where a commercial property is sold by a receiver or insolvency practitioner (IP), VAT must be charged on the sale if the owner had exercised and properly notified an option to tax (OTT) in respect of the property. The IP acting on behalf of the seller needs to establish whether an OTT has been made and notified so that VAT is charged , if needed.  This can be difficult if company records are in disarray, directors of the insolvent company are non-cooperative and/or the IP or receiver has limited knowledge of the property and company.

The new year has seen a rapid pace being set in terms of anticipated and actual legislative, regulatory and common law changes across Australia’s restructuring and insolvency regimes. The federal government’s inquiry into restructuring and bankruptcy laws is ongoing against a backdrop of sustained monetary policy interventions.

Following the sanctioning of the Good Box restructuring plan (RP) it seems the answer is yes. This might sound surprising to those familiar with schemes of arrangement, because that outcome is at odds with the long-standing decision in Re Savoy Hotels.

For those less familiar with schemes and scheme case law, the court declined to sanction the Savoy scheme because the company did not approve it, consequently the judge found that the court had no jurisdiction to sanction it.

Last month, the United States Bankruptcy Court for the District of Massachusetts denied confirmation of a cannabis company employee’s Chapter 13 plan and dismissed his bankruptcy case. The employee, Scott H. Blumsack (the “Debtor”), is a general manager who is licensed in Massachusetts to work for Society Cannabis Co., a Massachusetts-licensed retailer, wholesaler, and producer of cannabis products.

On 7 December 2022, the European Commission unveiled a draft directive (2022/0408 (COD)) (the “Directive”) proposing to harmonise certain aspects of insolvency laws across the European Union[1].

In Short

The Situation: Insolvency officeholders increasingly find their investigations into a company's affairs frustrated by the comingling of records on a "group" server. Claims to privilege by other group entities (or even third parties) are then advanced as an obstacle to delivering company records to the officeholder, leading to expensive and logistically complex inspection and review processes that can be a burden on insolvent estates.

In Short

The Situation: Directors in England and Wales owe duties to the companies to which they are appointed (and may face personal liability for breaching such duties). Although the Companies Act 2006 obliges directors to maximise value for a company's shareholders, case law has suggested that directors should act in the interests of a company's creditors if a company becomes distressed.

To promote the finality of bankruptcy asset sales, section 363(m) of the Bankruptcy Code "moots" an appeal of an order approving a sale to a good-faith purchaser unless the party challenging the sale obtains a stay pending appeal. Courts, however, sometimes disagree over the scope of section 363(m) and whether it also bars appeals of orders approving transactions that are related to a sale, such as settlements.

The ability of a bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") to assume, assume and assign, or reject executory contracts and unexpired leases is an important tool designed to promote a "fresh start" for debtors and to maximize the value of the bankruptcy estate for the benefit of all stakeholders. However, the Bankruptcy Code establishes strict requirements for the assumption or assignment of contracts and leases.

Chapter 11 debtors commonly use plans of reorganization to decelerate defaulted loans and reinstate the obligations according to their original terms as a means of locking in favorable terms in an unfavorable market. In order to do so, the Bankruptcy Code requires that the trustee or chapter 11 debtor-in-possession ("DIP") "cure" any defaults under the loan agreement, other than defaults related to a debtor's financial condition ("ipso facto provisions") or penalties payable due to the debtor's breach of certain non-monetary obligations.