Recent Events

The federal district court in New Jersey recently denied an appeal by maritime creditors of Hanjin to lift bankruptcy protections and allow arrest of Hanjin's vessels in and near U.S. ports. The federal district court judge agreed with the bankruptcy judge's grant of blanket protection to Hanjin and directed creditors of Hanjin to file claims in the Korean bankruptcy proceeding. Those claims are now due by October 25, 2016 in the Korean proceedings, according to an amended order issued by the Korean judge.

A number of towage and bunker suppliers in the Hanjin Shipping Co. Ltd. chapter 15 case have requested the intervention of a district court judge to clarify whether the U.S. Bankruptcy Court has authority to "effectively extinguish[] . . . maritime liens" on chartered vessels. The bankruptcy judge has acted to try to preserve Hanjin's assets and ability to continue its business, as he should do. The case concerns roughly $14 billion worth of cargo afloat or held up in container yards across the world. At least 10 vessels are known to be steaming toward U.S.

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.

This past weekend, Hanjin vessels commenced unloading operations on the U.S. West Coast for the first time since Hanjin filed its bankruptcy petition with the Seoul Central District Court in Korea. Vessels have also been reportedly unloading in Japanese and Canadian ports. There is an obvious overriding public interest in having the many millions of dollars worth of cargo resume moving to its various destinations.

Yesterday afternoon in Newark, New Jersey, Judge John K. Sherwood of the U.S. Bankruptcy Court granted Hanjin Shipping Co. Ltd.'s request to recognize its Korean bankruptcy case and to provide U.S. bankruptcy protection to its assets and operations within the United States. However, the U.S. Bankruptcy Court's protection is subject to another hearing on Friday to sort out what arrangements can be made among the various stakeholders.

The Wall Street Journal has recently observed that if Hanjin Shipping Co. Ltd. fails in its attempts to reorganize and emerge from bankruptcy proceedings in Korea, it would represent the largest container shipping company to date to collapse. In the meantime, its creditors have apparently been active in Chinese, Singaporean, and American ports.

The bar for recovering assets that have been dubiously transferred out of an insolvent company may not be as high as one might think.

Background

On 14 June 2016, in its judgment delivered in Great Investments Ltd v Warner [2016] FCAFC 85, the Full Court of the Federal Court of Australia confirmed that a benefit transferred from a company without authority can only be retained by the recipient in very limited circumstances.

The issue of how causation can be established has been one significant debate in Australian securities class actions involving alleged breaches of the Corporations Act by corporations. It has been unresolved whether shareholders must prove individual reliance on the contravening conduct of companies, or if the conduct affects the market price of shares purchased and/or sold by shareholders is sufficient.

Section 440D imposes a stay on “proceedings in a court” against a company whilst it is in administration under Part 5.3A of the Corporations Act. It is well established that the term “proceedings in a court” does not include an arbitration proceeding: see Larkden Pty Limited v Lloyd Energy Systems Pty Limited [2011] NSWSC 1305 at [42] (Hammerschlag J). Notwithstanding this, can the Court use its general power to make orders under s447A to extend the reach of s440D in order to impose a stay on an arbitration against a company in administration?

The recent Full Court of the Federal Court of Australia decision of Templeton v Australian Securities and Investment Commission [2015] FCAFC 137 has considered the application of 'proportionality' in determining receivers' remuneration.