In the lead up to peak periods, many businesses come under financial pressure due to various internal and external factors. Seasonal sales may not have been as planned and provision needs to be made for employee holiday pay.

On 7 November 2014 the Government released the Insolvency Law Reform Bill.

The Bill comprises of a package of proposals aimed at amending and streamlining the Bankruptcy Act 1966 and the Corporations Act 2001. It also contains proposals to reform how liquidators are registered and regulated.

Requirements to become a liquidator

Of particular interest to practitioners are the changes to the way new liquidators will become registered.

Introduction

Achieving sales growth is a significant challenge for many Australian businesses. Even if new customers can be found, an inability to collect and hold onto payments can pose another obstacle to growth.

To survive and prosper businesses must plan, and implement, strategies for sustained profitability. It is not enough to simply achieve fantastic sales results and get the money in, businesses must also anticipate, and protect against, the risk that payments received from customers may be clawed back if a liquidator is later appointed to the customer.

On August 26, 2014, Judge Robert D. Drain of the Bankruptcy Court for the Southern District of New York issued a bench ruling in In re MPM Silicones, LLC, Case No. 14-22503 (RDD), on several aspects of the plan of reorganization filed by debtor Momentive Performance Materials, Inc., a specialty chemicals manufacturing company, and its affiliated debtors.

On August 15, 2014, the Eleventh Circuit entered a Memorandum Opinion in the Wortley v. Chrispus Venture Capital, LLC case (In re Global Energies, LLC, “Global”)¹ unwinding a section 363 sale order entered in 2010 by the Bankruptcy Court for the Southern District of Florida based on a finding of bad faith in the filing of an involuntary bankruptcy case in 2010.

On September 3, 2014, the United States Court of Appeals for the Fifth Circuit entered an opinion vacating various orders of the United States Bankruptcy Court and District Court for the Southern District of Texas (the “Bankruptcy Court” and the “District Court”) in the bankruptcy cases of TMT Procurement Corporation and its affiliated debtors (the “Debtors”), including a final order approving the Debtors’ post-petition debtor in possession financing (the “DIP Order”) with Macqua

The recent decision of the Federal Court in the matter of Divitkos, in the matter of ExDVD Pty Ltd (In Liquidation) [2014] FCA 696 confirms that where a receiver is required to make a payment under Section 433 of the Corporations Act 2001 (Cth) (Act) to a priority creditor (such as employee entitlements), the secured creditor (who appointed the receiver) may be entitled to be subrogated to the rights of that priority creditor in the winding up of the company.

The Law

A bankrupt trustee has been unsuccessful in trying to recover property of a former bankrupt more than 20 years after the date of bankruptcy. The decision of the Federal Court reinforces the limitation period in which a trustee can make a claim on any property of the bankrupt as outlined in Section 127(1) of the Bankruptcy Act 1966 (Cth) (Act)

Stewart v Atco Controls Pty Ltd (in Liquidation) [2014] HCA 15

The High Court this week reinforced the significance and standing of a Liquidator's equitable lien for his or her costs and expenses incurred in realising assets of a company in liquidation, as first clearly espoused by Justice Dixon in the 1933 case of Universal Distributing. Gadens acted for the successful Liquidator/Appellant in the unanimous judgment of the five High Court Justices.

The Principle