In the recent Federal Course case of Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953 (Lane v DCT), Justice Derrington provided an in-depth analysis of the principles relating to an insolvent trustee’s right of indemnity over trust assets.
The Pre-Action Protocol for Debt Claims comes into force on 1 October 2017. This note deals with the key elements to be aware of.
Applicability
While the Protocol is named the Pre-Action Protocol for Debt Claims the first thing to note is that it only applies to businesses claiming payment of debts from an individual (including individual sole traders) and does not apply to business-to-business debts.
The amendments to the Corporations Act1 to broaden the ‘safe harbours’ for directors on an insolvency were passed by Parliament on 12 September 20172 and are awaiting a date for commencement.
The intention of the legislation is to “drive cultural change amongst company directors by encouraging them to keep control of their company, engage early with possible insolvency and take reasonable risks to facilitate the company’s recovery instead of simply placing the company prematurely into voluntary administration or liquidation.”3
On 12 September 2017, some of the most significant reforms of Australia’s corporate insolvency laws in recent years were passed by both Houses of the Australian Federal Parliament. These reforms will introduce:
New Federal Law No. 266-FZ dated 29 July 2017 (the Amendment Law) introduces notable changes to Russia’s insolvency rules. Importantly, the law does away with the original provisions on vicarious liability of controlling persons in RF Law No. 127-FZ on Insolvency of 26 October 2002 (the Insolvency Law). The Amendment Law expands this concept in a series of new clauses. The rules came into force 30 July 2017.
This update deals with “onerous property” and the issues involved when a trustee in bankruptcy disclaims onerous land, including the potential impact on lenders.
Disclaimer of onerous land by a trustee in bankruptcy
At any time, the trustee of a bankrupt estate may disclaim land which is burdened with onerous covenants or is unsaleable or not readily saleable (s 133 of the Bankruptcy Act 1966 (Cth)).
The innocuously named Treasury Laws Amendment (2017 Enterprise Incentives No 2) Bill 2017 (Cth) (the Bill) makes only a small number of amendments to the Corporations Act 2001 (Cth) insofar as the safe harbour reforms of Australia’s insolvent trading law are concerned.
The Queensland Supreme Court in the case of Scott & Ors v Port Hinchinbrook Services Limited & Ors [2017] QSC 92 has again confirmed the utility of a Deed of Company Arrangement (DOCA) in respect of director appointments and members’ rights as part of a restructure.
Issues
The Court was asked to consider the following issues:
LBI EHF (in winding up) v. Raiffeisen Zentralbank Österreich AG and Raiffeisen Bank International AG [2017] EWHC 522 (Comm)
A recent court decision is a timely reminder of the limitations that can affect a person’s ability to rely on set-off rights when a debtor or contract counterparty becomes insolvent.