Making sense of the purchase money security interest (PMSI) priority provisions in the Personal Property Securities Act 2009 (Cth) (PPSA) can be challenging for financiers and insolvency practitioners tasked with assessing the merits of competing security interest claims.

The recent judgment of the Western Australian Court of Appeal in Hughes v Pluton Resources Ltd 1, concerns the interaction between a deed of company arrangement (‘DOCA’) under Part 5.3A of the Corporations Act 2001 (Cth) (‘CA’) and the Personal Property Securities Act 2009 (Cth) (‘PPSA’).

The new section 588GA of the Corporations Act 2001 (Cth) (Act) provides a “safe harbour” from insolvent trading claims for directors who, when suspecting a company may be or is insolvent, start developing a course of action that is reasonably likely to lead to a better outcome for the company.

In the recent Federal Course case of Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953 (Lane v DCT), Justice Derrington provided an in-depth analysis of the principles relating to an insolvent trustee’s right of indemnity over trust assets.

The amendments to the Corporations Act1 to broaden the ‘safe harbours’ for directors on an insolvency were passed by Parliament on 12 September 20172 and are awaiting a date for commencement.

The intention of the legislation is to “drive cultural change amongst company directors by encouraging them to keep control of their company, engage early with possible insolvency and take reasonable risks to facilitate the company’s recovery instead of simply placing the company prematurely into voluntary administration or liquidation.”3

On 12 September 2017, some of the most significant reforms of Australia’s corporate insolvency laws in recent years were passed by both Houses of the Australian Federal Parliament. These reforms will introduce:

The innocuously named Treasury Laws Amendment (2017 Enterprise Incentives No 2) Bill 2017 (Cth) (the Bill) makes only a small number of amendments to the Corporations Act 2001 (Cth) insofar as the safe harbour reforms of Australia’s insolvent trading law are concerned.

The Queensland Supreme Court in the case of Scott & Ors v Port Hinchinbrook Services Limited & Ors [2017] QSC 92 has again confirmed the utility of a Deed of Company Arrangement (DOCA) in respect of director appointments and members’ rights as part of a restructure.

Issues

The Court was asked to consider the following issues:

In a decision signed July 17, 2017 in the Our Alchemy, LLC bankruptcy (case 16-11596), Judge Gross of the Delaware Bankruptcy Court granted a trustee’s partial motion to dismiss a complaint, holding that a creditor cannot assert general claims against a Chapter 7 Trustee in his official capacity (essentially a derivative action meant to enrich the creditor body) .

On July 6-7, 2017, Craig Jalbert, in his capacity as Trustee for F2 Liquidating Trust, filed approximately 187 complaints seeking the avoidance and recovery of allegedly preferential and/or fraudulent transfers under Sections 547, 548 and 550 of the Bankruptcy Code (depending on the nature of the claims). In certain instances, the Trustee also seeks to disallow claims of such defendants under Sections 502(d) and (j) of the Bankruptcy Code.