A recent Supreme Court of Queensland decision as to what constitutes a ‘’construction company’’ under the QBCC Act brings consequences for construction groups who undertake works under different State entities.

Partner, Ted Williams, and Senior Associate, Gemma Twemlow, review the decision and what it means for construction companies.

Over the last twenty years, courts have increasingly insulated transactions from avoidance as fraudulent transfers by invoking the so-called “settlement payment” defense codified in section 546(e) of the Bankruptcy Code. The safe harbor has been interpreted in the Second and Third Circuits and elsewhere as precluding debtors, trustees and creditors committees from clawing back otherwise objectionable pre-bankruptcy transfers solely because the money at issue flowed through a bank or other financial institution.

The Tempnology Trademark Saga. When it comes to decisions on bankruptcy and trademark licenses, the In re Tempnology LLC bankruptcy case is the gift that keeps on giving.

From 1 July 2018, reforms to the Corporations Act 2001 (Cth) (the Act) will become effective including the addition of safe harbour laws and protections against ipso facto clauses.

The new Building Industry Fairness (Security of Payment) Bill 2017 (Qld) was assented to on 10 November 2017, which will see the introduction of project bank accounts (PBAs) into the Queensland construction industry. As the project bank account provisions will be trialled from 1 January 2018, contractors, at least those involved in State Government projects, should familiarise themselves with the relevant provisions.

What Are Project Bank Accounts?

A PBA is a trust over:

Factoring agreements are very popular with subcontractors and suppliers in the construction industry, assisting cash-flow by providing a line of credit against accounts receivable. However, like any financial product, they can present complexities, pitfalls and at times surprises when pursuing debt recovery and enforcement action. 

Where a subcontractor is factoring its debts:

Just about every year amendments are made to the rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The amendments address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. As the photo above reminds us, the rule amendments are ultimately adopted by the U.S. Supreme Court (and technically subject to Congressional disapproval).

On 1 September 2017, Boart Longyear Limited (Boart), successfully implemented the reconstruction of its US law governed debt using Australian creditor schemes of arrangement (Schemes).

This is a landmark case that will influence Australian corporate reconstructions for years to come.

The case involved approval by the NSW Supreme Court and recognition by the US Bankrupcty Court under Chapter 15 of the US Bankruptcy Code, ensuring cross border effectiveness for the reconstruction.

Highlights

The Supreme Court recently agreed to review the applicability of the safe harbor provision in section 546(e) of the Bankruptcy Code after differing interpretations of the statute created a split among the circuit courts. The ultimate outcome on the issue currently before the Supreme Court will undoubtedly impact how parties choose to structure their debt and asset transactions going forward.

External administrators of companies can now assign any right to sue that is conferred on them by the Corporations Act, for example voidable transaction claims and insolvent trading claims. Previously these were considered rights that could only be utilised by the appointed liquidator and so could not be assigned. Now they can.

When did this start?

• This has already begun. It commenced on 1 March 2017.

What legislation brought this about?