Summary

This week, the Court considers a property owner’s claim to an easement over a maintenance road on federal land, and casts doubt on the longstanding “person aggrieved” standing requirement in bankruptcy appeals.

KIMBALL-GRIFFITH, L.P. v. BRENDA BURMAN, ET AL

The Court rejects a property owner’s claim to an easement over a maintenance road on federal land.

In Reel Action Sports Fishing Pty Ltd v Marine Engineering Consultants Pty Ltd, [1] the Court offered a timely warning to liquidators of the dangers of adopting and acting on an incorrect understanding of the ownership of contested property. The Court ordered damages against the liquidator personally, despite his position as agent for the company in liquidation.

Background

In a recent case involving Savannah AG Research Pty Ltd (Savannah), the Federal Court of Australia considered an application for relief by Savannah’s majority shareholder under section 447A(1) or section 447C(2) Corporations Act 2001 (Cth) which alleged that the directors did not hold a genuine opinion Savannah was insolvent or likely to become insolvent and were motivated by an improper purpose.

Overview/Executive Summary

In response to the recent collapse of several prominent banking institutions, Morrison Foerster conducted a brief poll to gauge how companies and their employees are faring in the wake of these historic events. Our goal is to understand how this situation has impacted these organizations, including delving into which issues and challenges, if any, will be top of mind for business leaders and their respective organizations in the weeks and months ahead.

Methodology

In a departure from prior precedent in the United States Bankruptcy Court for the Southern District of New York (SDNY), a recent opinion by Judge Michael E. Wiles in In re Cortlandt Liquidating LLC,[1] effectively lowered the Bankruptcy Code section 502(b)(6) cap on rejection damages that a commercial real estate landlord may claim, by holding that the cap should be calculated using the “Time Approach,” rather than the “Rent Approach.”

Calculation of Lease Rejection Damages

On 17 February 2023, Justice Ball of the New South Wales Supreme Court handed down his decision in Kennedy Civil Contracting Pty Ltd (Administrators Appointed) v Richard Crookes Construction Pty Ltd; In the matter of Kennedy Civil Contracting Pty Ltd [2023] NSWSC 99.

Facts

The FDIC receiverships of Silicon Valley Bank and Signature Bank have caused certain early-stage companies to face potentially crippling near-term liquidity issues. These liquidity issues may result in a company becoming insolvent. Therefore, boards of directors of such companies need to consider their fiduciary duties as well as steps that can be taken to mitigate risks.

Fiduciary duties are typically owed to the company for the benefit of its owners.

The March 2023 banking crisis has been an unexpected “stress test” for dealing with liquidity issues.

When state regulators closed Silicon Valley Bank this past Friday, many startups understandably faced severe liquidity issues triggered by the sudden and unexpected loss of access to their deposits.

On 2 March 2023 the Supreme Court of Victoria published its reasons in the matter of Atlas Gaming Holdings Pty Ltd [2023] VSC 91 (the Atlas case) in which Gadens acted on behalf of the Liquidator of four companies seeking a pooling order pursuant to section 579E of the Corporations Act 2001 (Cth) (the Act). There have been very few judgments on section 579E which was introduced in 2007 by the Corporations Amendment (Insolvency) Act 2007 (Cth) Sch 1 items 133ff and operative from 31 December 2007.