Whether you are a liquidator, director, employee, shareholder or creditor of a company in financial distress, the experience of a corporate insolvency is usually not pleasant. Directors face the threat of being investigated for breaches of directors duties, employees become unemployed, shareholders become the owners of worthless assets and creditors are forced to come to the realisation that they will never see the money owed to them (or at least not all of it).

We all know that Australians have an unhealthy obsession with owning their own home. And with house prices surging over the past 5 years there is every right to be obsessed. But why sacrifice so much to purchase your dream home only to watch it fall into the hands of creditors?

The recent decision of Markovic J in Robert Kite and Mark Hutchins in their capacity as liquidators of Mooney’s Contractors Pty Ltd (in liq) & Anor v Lance Mooney & Anor [2017] FCA 653 in the Federal Court of Australia provides practitioners with further clarification of the requirements when insolvency practitioners are appointed to companies which operate as corporate trustees. 

KEY TAKE-HOMES FOR INSOLVENCY PRACTITIONERS

Back in March 2017 the NSW Court of Appeal handed down the unanimous decision in Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38 (Sakr), reigning in Brereton J’s application of proportionality to liquidator’s remuneration. This week the decision of in the matter of Australian Company Number 074 962 628 Pty Ltd (in liq) (formerly Colonial Staff Super Pty Ltd) [2017] NSWSC 370 (Colonial Super) was handed down by the NSW Supreme Court. The decision is notable as one of the first applications of the principles enunciated in the Sakr decision. 

On 9 March 2017 the NSW Court of Appeal handed down its decision in Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr [2017] NSWCA 38, unanimously allowing the liquidator’s appeal against a decision of Brereton J applying principles of proportionality and ad valorum to reduce the liquidator’s outstanding remuneration from the $63,000 claimed by the liquidator to $20,000.

In November 2016, the High Court of Australia heard a challenge brought by Clive Palmer in respect of the constitutional validity of the power of a liquidator to examine a former director of a company before the court. At the conclusion of that hearing, Kiefel J, as her Honour then was, stated that the Court was unanimously of the view that the challenge had failed and that reasons would be published later. Yesterday the High Court published those reasons.

The proceedings

On 23rd November 2016, the European Commission released a package of banking legislation reforms. Some of these were expected in particular those related to the minimum requirement for eligible liabilities and own funds (MREL) under the Bank Recovery and Resolution Directive (BRRD) and the implementation of the Financial Stability Board's (FSB) total loss absorbing capacity (TLAC) principles into the MREL requirements.

Section 447A

JOEL COOK Associate, Litigation and Dispute Resolution Group, McCabes

ANDREW LACEY Principal, Litigation and Dispute Resolution Group, McCabes

legal update

ONE SIZE DOES NOT FIT ALL

Varying the scope of the Part 5.3A moratorium on proceedings against companies in voluntary administration.

WATERFALL IIC JUDGMENT (ISDA MASTER AGREEMENT ISSUES)1

Background

Insolvency Practitioners (IPs) commonly adopt time-based costing for the calculation of their remuneration, primarily on the basis that it ensures that the IP is only remunerated for the work actually undertaken and it ensures that remuneration reflects the simplicity or complexity of particular tasks. Three other ways in which remuneration are common calculated are ‘fixed fee’, ‘percentage’ (such as in respect of recoveries/realisations) and ‘contingency’ bases.