Peter Bowden heads Gilbert + Tobin’s Restructuring + Insolvency group.
He specialises in front-end restructuring and insolvency and has significant experience advising hedge funds, banks, special situations groups, investment banks, insolvency practitioners, creditors and debtors on all elements of restructuring, insolvency, liability management, workouts, banking and distressed debt transactions in a range of industries including financial services, energy, mining, mining services, property, construction, agriculture and manufacturing.
After depositors rushed to withdraw funds from Silicon Valley Bank (SVB), on Friday, March 10, 2023, the US bank was closed by the California Department of Financial Protection and Innovation (DFPI), and the Federal Deposit Insurance Corporation (FDIC) was named receiver of the closed bank.
This article analyses the decision of Ball J in Kennedy Civil Contracting Pty Ltd (Administrators Appointed) (KCC) v Richard Crookes Construction Pty Ltd (RCC); in the matter of Kennedy Civil Contracting Pty Ltd [2023] NSWSC 99 and considers the ramifications for the scope of section 32B of the Building and Construction Industry Security of Payment Act 1999 (NSW) (SOP Act).
Introduction
Since 1988, the ‘rule in West Mercia’ – so named after the West Mercia Safetywear v Dodd Court of Appeal case – has been the leading authority for when directors of financially stressed companies are subject to the so-called ‘creditor duty’, namely the duty to consider the interests of the company’s creditors.
The Ontario Superior Court of Justice’s decision in Carillion Canada Inc. clarifies how the principles in Montréal (City) v. Deloitte Restructuring Inc. (Montréal) should be applied to contingent obligations that are only quantified after the debtor company files for creditor protection.
In the receivership proceedings of Distinct Infrastructure Group Inc.
On July 13, 2022, the Court of Appeal for Ontario allowed an appeal from the Order of a bankruptcy judge in Sirius Concrete Inc. (Re), 2022 ONCA 524 (Sirius), which ruled that certain funds paid by a trade creditor formed part of the bankrupt’s estate. The issue on appeal was whether a constructive trust should be imposed over certain funds due to a claim of unjust enrichment arising from alleged fraudulent misrepresentations made by the bankrupt on the eve of its bankruptcy filing.
What this means for the shareholders of a business facing insolvency