After years of delay, on 1 August 2016, the Third Parties (Rights against Insurers) Act 2010 will be brought into force in the United Kingdom, making it easier for a party with a claim against an insolvent business to bring the claim directly against the insurer of that business.

A recent decision of the High Court has ended an insurer’s fight to avoid being joined to insolvent trading proceedings. This decision confirms the ability of liquidators to directly pursue proceeds of insurance policies held by insolvent insured defendant directors and has important ramifications for insolvency practitioners as well as insurers and litigation funders.

Summary

In the matter of Fat 4 Pty Limited (In Liquidation)

A recent case in the Supreme Court of Victoria has provided some relief for liquidators seeking to add a defendant to a voidable transaction claim after the expiry of the limitation period in circumstances where the wrong defendant was sued by mistake. In such circumstances, liquidators can substitute the incorrect party for the desired defendant without being time barred by s 588FF(3) of the Corporations Act, irrespective of whether the liquidator’s mistake as to the correct party was reasonable.

A possible alternative to the freezing injunction.

A judgment has recently provided helpful guidance on a creative form of injunction. The “notification order” compels a defendant to give notice to the claimant before disposing or dealing with its assets. This notification order is less onerous than a freezing injunction, and although it usually accompanies the freezing injunction, in this case, the order was issued as standalone relief. The notification would alert the claimant to apply for a freezing injunction prior to dissipation of any assets.

On 29 February 2016, the Insolvency Law Reform Bill 2015 received Royal Assent. The resulting Act, the Insolvency Law Reform Act 2016 (Cth) represents the most significant suite of reforms to Australia’s bankruptcy and corporate insolvency laws in twenty years and is an integral component of the Federal Government’s agenda of improving economic incentives for innovation and entrepreneurialism.

In a decision handed down on 11 February 2016, the High Court has confirmed that the State Supreme Courts have jurisdiction to grant relief to plaintiffs seeking to join insurers of insolvent or potentially insolvent defendants, and a declaration that the insurer is liable to indemnify the defendant. 

Introduction

Tamaya Resources Limited (In Liq) v Deloitte Touche Tohmatsu [2016] FCAFC 2

It is common in large complex cases for plaintiffs to seek to amend their claims during the course of the litigation. A plaintiff may be required to pay the costs thrown away but if its amendment application was brought in good faith and with a proper explanation, it would usually be able to amend its claim.

Decision establishes framework for future rulings that covenants in midstream agreements do not run with the land.

On February 17, the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC) proposed a joint rule that would govern the resolution of large broker-dealers that are designated as “covered financial companies” under the Orderly Liquidation Authority (OLA) provisions (Title II) of the Dodd-Frank Act.

Most companies do not own all of the intellectual property (IP) rights that their businesses rely on. It is not uncommon for some portion of a company’s IP rights to be in-licensed from other persons or entities under a license agreement. In such cases, the licensee has contractual rights to use the IP that is the subject of an in-license but not full ownership of such IP. In the day-to-day operations of a company, the distinction between owned IP rights and in-licensed IP rights can easily get lost.