The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2023 (Collective Redundancies AmendmentAct) came into operation on 1 July 2024.

The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2023 (Act) came into effect on 1 July 2024.

Redefine Australian Investments Limited (Company), an Irish-registered company was placed in voluntary liquidation on 24 January 2018. Martin Ferris was appointed as the liquidator (Liquidator).

The Proceedings

The Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 (Act) has been signed into law but awaits a commencement order to bring it into operation.

In summary, the Act amends the Companies Act 2014 (Companies Act) by modifying the attribution test for related companies to contribute to the debts of the company being wound up, broadening the operative time for unfair preferences, and varying the test for reckless trading.

1. Related company contribution

In a recent legal development that underscores the intricate interplay between federal bankruptcy law and the cannabis industry, a court case has emerged involving a bankruptcy filing by an employee of a cannabis company. It’s well established that, because cannabis is generally considered a controlled substance under the federal Controlled Substances Act (CSA), certain cannabis related companies are precluded from obtaining debt relief through bankruptcy. Now individuals employed by cannabis companies might find themselves in the same boat. In Blumsack v. Harrington, 2024 Bankr.

Following on from the UK Supreme Court decision in Sequana (discussed here), the recent UK High Court (UKHC) decision in Hunt v Singh [2023] EWHC 1784 (Ch), further considered the duty of directors to take into account the interests of creditors in certain circumstances.

The High Court (Court) recently dismissed a petition seeking the winding up of a biofuel company (Company).

The ex tempore judgment is of note because it considers the standing of the Petitioner to bring the application and the consequences of a relevant witness not being cross-examined by the Petitioner on his affidavit evidence regarding the solvency of the Company.

Background

The scheme of arrangement (Rescue Plan) prepared by the examiner of Mac Interiors Limited (Company) has not been approved by the High Court following strong objections from the Revenue Commissioners (Revenue).

In its challenge, Revenue argued that there had been an error in “class composition” or, in other words, an error in the classification of creditors that voted on the Rescue Plan.

Class Composition

On September 20, 2023, the U.S. Bankruptcy Court for the Central District of California (“Court”) confirmed a plan for a cannabis-related business (“Debtor”) to sell its equity interests in a Canadian cannabis company, Lowell Farms, and distribute the proceeds to its creditors.

This morning, after much anticipation, the Supreme Court has released its judgment in Yan v Mainzeal Property Construction Limited (in liq) [2023] NZSC 113, largely upholding the Court of Appeal's decision, and awarding damages of $39.8m against the directors collectively, with specified limits for certain directors. The decision signals that a strong emphasis on 'creditor protection' is now embedded in New Zealand company law.