Insolvency practitioners can benefit from registration errors on the Personal Property Securities Register (PPSR).

Stay alert to any mistakes made by secured parties, as unregistered or invalidly registered interests could vest in the company.

Common errors include:

Some term loans allow borrowers to redeem debt. But to protect a lender’s expected yield, such loans often impose a “make-whole premium” on redemption. That is, they require compensation to the lender for the borrower’s premature termination of interest payments.

There continues to be doubt about the validity of certain Committees of Inspection (COI) established during a liquidation and the approvals given by them. Another decision of Pritchard J in the Supreme Court of Western Australia reinforces the potential risk to liquidators relying on COI approvals in the scenario where no separate meetings of creditors and contributories (i.e. shareholders) are held to approve the establishment of a COI.

A recent decision of the High Court has ended an insurer’s fight to avoid being joined to insolvent trading proceedings. This decision confirms the ability of liquidators to directly pursue proceeds of insurance policies held by insolvent insured defendant directors and has important ramifications for insolvency practitioners as well as insurers and litigation funders.

Summary

In an announcement made on 23 August 2016, the Federal Government has provided insolvency practitioners with a further six months to implement certain provisions of the Insolvency Law Reform Act 2016 (Cth) (Act). The Act is aimed at streamlining registration and disciplinary processes and consolidating conduct and procedural requirements, to reduce costs associated with and improve timeliness of external administrations and ultimately increase creditor returns.

Structure of reforms

The Personal Property Securities Register (“PPSR”) has operated for several years, but defective registrations remain a (sometimes serious) problem for many of those looking to protect their interests. Unlike with real property, the PPSR has no title registrars who will requisition faulty forms. The responsibility for noticing mistakes lies with the party attempting to protect their interests.

A recent decision of the High Court has ended an insurer’s fight to avoid being joined to insolvent trading proceedings. This decision confirms the ability of liquidators to directly pursue proceeds of insurance policies held by insolvent insured defendant directors and has important ramifications for insolvency practitioners as well as insurers and litigation funders.

Summary

In the matter of Fat 4 Pty Limited (In Liquidation)

A recent case in the Supreme Court of Victoria has provided some relief for liquidators seeking to add a defendant to a voidable transaction claim after the expiry of the limitation period in circumstances where the wrong defendant was sued by mistake. In such circumstances, liquidators can substitute the incorrect party for the desired defendant without being time barred by s 588FF(3) of the Corporations Act, irrespective of whether the liquidator’s mistake as to the correct party was reasonable.

A Delaware bankruptcy court has joined what appears to be a recent trend toward invalidating limited liability company operating agreement provisions that effectively afford lenders veto power over the LLC’s authority to file for bankruptcy protection; the court found one such provision void as contrary to federal public policy. In re Intervention Energy Holdings, LLC, et al., Case No. 16-11247 (KJC) (D.I. 69), 2016 W.L. ___________ (Bankr. D. Del. June 3, 2016).

Yes, Gathering Agreements Can Be Rejected as Executory Contracts (At Least Under One Court’s Interpretation of Texas Law)