The Turnbull Government’s much-heralded ‘Innovation Statement’ was released yesterday. It contained wide-ranging statements on reforms aimed at fostering innovation across a number of sectors in the Australian economy.

One important reform area is in Australian corporate insolvency law.

Corporate insolvency law reform timetable

The Innovation Statement includes important content for the reform of Australia’s corporate insolvency laws. It is part of an ongoing reform exercise which has followed this timetable to date:

Many courts recognize that a corporation's constituent (such as an audit committee or a group of independent directors) can own the privilege and work product protection covering the constituent's internal corporate investigation. Under this approach, the company's bankruptcy trustee cannot access or waive that privilege or work product protection. See, e.g., Ex parte Smith, 942 So. 2d 356 (Ala. 2006) (denying a bankruptcy trustee's attempt to access pre-bankruptcy communications between the company's independent directors and its Skadden Arps lawyers).

Consider this situation: a dispute has arisen between two parties in relation to an agreement which is subject to an arbitration clause. Separately, a winding up application has been made against one of the parties to the arbitration in the jurisdiction in which it is incorporated. An arbitral award is obtained against the potentially insolvent company. That company has assets in Hong Kong, against which the creditor is now seeking to enforce their rights.

On Sept. 30, a district court resolved a significant portion of outstanding litigation in the bankruptcy proceeding of Lehman Brothers Holdings Inc. and its subsidiaries.See Lehman Bros. Holdings Inc. v. JPMorgan Chase Bank, N.A. (In re Lehman Bros. Holdings Inc.), No. 1:11-cv-06760 (S.D.N.Y. Sept., 30, 2015). This litigation flows from the debtors’ allegations that JPMorgan Chase Bank, N.A. (JPMC) coerced billions of dollars from Lehman on the eve of its bankruptcy filings in September 2008. Lehman Brothers Holdings Inc.

The unanimous decision by the Full Court of the Federal Court in Templeton v Australian and Securities Investments Commission [2015] FCAFC 137 confirms that the concept of proportionality is a well-recognised factor in considering the question of reasonable remuneration for an insolvency practitioner, and that, in assessing a remuneration claim, the Court can take into account the quality and complexity of the work as well as the value and nature of any property dealt with and the time reasonably spent.

General introduction to trust margin trading

On 31 March, 2015, the Supreme People’s Court issued four model cases, including Shagang LLC. (Shagang) v. Kaitian LLC.(Kaitian), a case in relation to an objection to enforcement of a distribution plan. In the case, the Court has referred to the Deep Rock Doctrine originated from the United States, states for the first time that shareholders whose capital contribution is insufficient shall be subordinated to external creditors of the company with respect to their payable debts.

The High Court today granted special leave to the Commissioner of Taxation (Commissioner) to appeal against the decision of the Full Court of the Federal Court in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2014] FCAFC 133. The appeal is likely to be heard later this year.

Significance

On 16 January 2015, Justice Beech, of the Supreme Court of Western Australia, handed down his decision in the matters of Hamersley HMS Pty Ltd v Davis [2015] WASC 14 and Hamersley Iron Pty Ltd v James [2015] WASC 10 (the Hamersley Decisions). In both matters, Hamersley sought to set aside determinations made by an adjudicator pursuant to the Construction Contracts Act 2004 (WA) (CCA) and Forge Group Construction Pty Ltd (In Liq) (Receivers and Managers Appointed) (Forge) sought leave to enforce the determinations.

A recent bankruptcy decision in Florida may have implications for troubled healthcare entities that seek to avoid Medicare termination and preserve reimbursements. In the case In re: Bayou Shores SNF, LLC, Case No. 8:14-bk-09521-MGW, (Bankr. M.D. Fla. Dec. 31, 2014), the bankruptcy court found that a nursing home’s Medicare provider agreement had survived bankruptcy despite notice and intent to terminate the agreement issued by the Center for Medicare and Medicaid Services (CMS).