The latest decision in the Arrium collapse should give some encouragement to Australia's restructuring sector.
Following a lengthy trial of 38 days in the NSW Supreme Court in March and April 2021, Justice Michael Ball (no relation) has handed down the decision in the two proceedings, Anchorage Capital Masters Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2) [2021] NSWSC 1025.
In dismissing these proceedings, Justice Ball has given some comfort to restructuring in Australia,
Before embarking on any litigation, or continuing any litigation that is on foot at the time of the liquidator's appointment, a liquidator should carefully weigh up the benefits and risks of pursuing a particular course of action.
A liquidator can be exposed personally in litigation. We discuss the risks to a liquidator associated with litigation by examining some recent cases where liquidators have been ordered to pay costs personally. We provide guidance on ways to mitigate this risk.
Balancing risk – weighing up competing priorities
Externally-administered companies will have 24 months to comply with financial reporting and AGM obligations, if ASIC's proposal goes ahead.
ASIC relief defers obligations to lodge financial reports and hold annual general meetings for companies in external administration by 6 months. Companies in liquidation (other than AFS licensees) do not have to comply with financial reporting or AGM obligations at all.
We discussed in the March 2020 edition of the Texas Bar Journal1 the bankruptcy court ruling by Judge Craig A. Gargotta of San Antonio in In Re First River Energy LLC that oil and gas producers in Texas do not hold perfected security interests in oil and gas well proceeds, notwithstanding the Texas Legislature’s efforts to protect producers and royalty owners following the downturn in the 1980s. The Fifth Circuit recently reaffirmed Judge Gargotta’s decision.
This article sets out some reflections on the decision of the Supreme Court in Sevilleja v Marex Financial Limited [2020] UKSC 31 from July 2020 which clarifies the scope of the so-called ‘reflective loss’ rule. The first instance judgment raised some comment-worthy issues regarding the economic torts which were not the subject of any appeal.
Companies post-restructuring are not subject to the rules protecting creditors of insolvent companies in section 588FL of the Corporations Act 2001.
There remain a number of issues in the proposed insolvency reforms that need careful deliberation, particularly where the Regulations have yet to be released for consideration.
The Corporate Insolvency and Governance Act 2020 (“CIGA”), which came into force on 26 June 2020, introduced a series of new “debtor friendly” procedures and measures to give companies the breathing space and tools required to maximize their chance of survival. The main insolvency related reforms in CIGA (which incorporates both permanent and temporary changes to the UK’s laws) include:
1. New moratorium to give companies breathing space from their creditors
2. Prohibition on termination of contracts for the supply of goods and services by reason of insolvency
The new debtor-in-possession model for small business restructuring is aimed at allowing viable small businesses to seize the initiative to quickly restructure to survive the economic impact of COVID-19, but we need greater clarity on key elements of the proposed insolvency framework.
Liquidators need to be mindful that a disclaimer of property may be challenged. The Supreme Court of Victoria underscored a key issue in establishing "prejudice" to creditors in a liquidation, holding that a disclaimer of property may be set aside where the liquidators are indemnified.