The Court of Appeal recently ruled, in Re KH Kitty Hall Holdings & Ors, that an agreement to restructure and discharge the secured debts of a number of companies by selling certain secured assets was not a bar to the appointment of an examiner to those companies. This was the case despite the fact that the application for the appointment of an examiner was inconsistent with the obligations imposed on the companies under the restructuring agreement and was objected to by the secured creditor.
The Government has released a consultation paper as part of their commitment to ongoing reform of Australia’s corporate insolvency regime. Phoenix activity refers to both legitimate business rescue activities and serial insolvency to avoid debts.
On 12 September 2017, the Hon Kelly O'Dwyer MP, Minister for Revenue and Financial Services, announced the Government's plans to crack down on illegal phoenixing activity (ie, the stripping and transferring of assets from one company to another to avoid paying liabilities) and ensure that those involved face tougher penalties.
The Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Act 2017 (Cth), which introduces a safe harbour for directors of insolvent companies and a stay on the operation of ‘ipso facto’ clauses during and after certain formal insolvency processes, received Royal Assent on 18 September 2017.
Director safe harbour
The Senate Economics Legislation Committee has released a report (Report) regarding its inquiry into the provisions of the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 (Bill) which amends:
The Treasury Laws Amendment (2017 Enterprise Incentives No 2) Bill 2017 was passed by the House of Representatives on 22 June 2017 and has had a second reading moved in the Senate.
The Bill:
Following consultation on exposure draft legislation between 28 March 2017 and 24 April 2017, the Treasury Laws Amendment (2017 Enterprise Incentives No.2) Bill 2017 (Cth) (Bill) was introduced into the House of Representatives and received its second reading speech on 1 June 2017.
The Bill proposes to:
A petition was recently filed in the High Court on behalf of two companies, Regan Development Limited (“Regan”) and McGettigan Limited (“McGettigan”) seeking the protection of the court pursuant to the Companies Act 2014 (the "Act"), and the appointment of an Examiner. Regan owns and operates the Regency Hotel on the Swords Road in Dublin and McGettigan owns and operates a licensed premise on Queen Street, Dublin 7 and four retail units in Bray, Co. Wicklow. On presentation of the petition the Court appointed Neil Hughes of Baker Tilly Hughes Blake as Interim Examiner.
In mortgage arrears cases separated couples have caused difficulties, in particular where one spouse has washed their hands from dealing with any debt. A recent High Court ruling has provided clarity in this area in relation to the Personal Insolvency Acts 2012-2015 and a secured creditor's position in relation to the non-engaging spouse.
On 28 March 2017 the Federal Government released for public consultation draft legislation (Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 – Exposure Draft) that seeks to amend the Corporations Act 2001 (Cth) (Corporations Act) by introducing: