Summary

Later this year the High Court will hear an appeal from the decision of the Victorian Court of Appeal in Re Willmott Forests Limited (Receivers and Managers appointed) (in liquidation) [2012] VSCA 202.

The decisions of the Court of Appeal and the trial judge were considered in our earlier alert that can be accessed by clicking here.

The liquidators of Lehman Brothers Australia are appealing a landmark Federal Court decision that found it liable for losses suffered by a number of local councils and charity groups.

On 19 April 2013, the Federal Court of Australia handed down its judgment in Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356. The Court enforced a foreign award against a company in liquidation, in the latest evidence of Australia’s pro-arbitration environment. 

Background

Affiliated Lender Provisions and Debt Buybacks - Unenforceability of Bankruptcy Voting Proxies Expose Flaws in “Market Standard” Provisions

An issue that is often overlooked, but should be considered in the context of large project transactions, is the potential insolvency of contractors and subcontractors. A bankruptcy proceeding involving a key contractor can cause headaches and costly delays, particularly if title to goods or work completed has not been transferred to a project owner. Accordingly, anticipating these types of issues and accounting for them in negotiating construction and supply contracts is an important step in any large project transaction.

In a pro-debtor opinion released on February 26, 2013, the Fifth Circuit Court of Appeals held that a debtor may “artificial impair” claims in a class to obtain an impaired and accepting class of claims as required by section 1129(a)(10) of the Bankruptcy Code. Western Real Estate Equities, L.L.C. v. Village at Camp Bowie I, L.P. (In re Village at Camp Bowie I, L.P.), No. 12-10271, 2013 WL 690497 (5th Cir. Feb. 26, 2013).

Statutory Background to the Artificial Impairment Issue

In the current economic climate, contactor insolvency is an increasing concern for all participants in the construction industry. 

The issue is currently receiving close attention from the NSW Government who commissioned an independent report following a spate of contractor insolvency events in 2012 (including Reed Constructions Australia Pty Ltd, St Hilliers Construction Pty Ltd, Southern Cross Constructions (NSW) Pty Ltd and Hastie Group Limited).

A recent decision in the protracted litigation by lenders of Extended Stay to recover under guaranties executed by owners of Extended Stay highlights the need for clear and unambiguous drafting in intercreditor agreements.

Most people think of an oil and gas mineral “lease” as, so named, a lease. However, this common thinking is not necessarily accurate, both with respect to state and federal law and in particular in the bankruptcy courts in the United States.