The financing of commercial litigation has grown enormously since it first appeared on the scene in the US, about 15 years ago. While still small relative to the overall US financial market, it is estimated that more than $11 billion has been invested in litigation finance in the US last year alone. In essence, lenders (often referred to as “funders”) provide commercial claimants and contingency law firms with the capital needed to prosecute legal claims which the funders believe have a strong likelihood of success.
This week’s TGIF considers In the matter of Guided Knowledge Group Pty Ltd [2022] NSWSC 255 in which a liquidator sought approval for his remuneration under Schedule 2 of the Corporations Act 2001 (Cth).
Key Takeaways
Backstop commitments have become commonplace in large corporate bankruptcy cases – they provide certainty to the debtor that it will have the funds needed to satisfy its obligations to creditors under its plan of reorganization and that it will have liquidity to operate post-bankruptcy as the reorganized entity. Backstop commitments are also a way for certain creditors to generate some additional return in the form of commitment fees and expense reimbursements in exchange for their agreement to backstop all or a material portion of a proposed rights offering or other financing arrangement.
In a recent decision of the Federal Court of Australia (Re WHBO Australia Pty Ltd[2022] FCA 234), Administrators of the Probuild group of companies (the Probuild Group) were granted a three-month extension for the convening period for the second meeting of Creditors largely due to the ‘size and complexity’ of the companies involved.
Key Takeaways
In the recent case of Stubbings v Jams 2 Pty Ltd [2022] HCA 6, the High Court has allowed an appeal relating to asset-based lending (ABL) and the enforceability of security associated with these loans. The High Court held that whilst asset-based lending itself is not unconscionable, certain conduct may render loans and security unenforceable. The decision is a reminder that lenders should ensure the circumstances of potential borrowers are fully scrutinised prior to lending.
This week’s TGIF considers the recent decision of In the matter of PIC Lindfield 19 Pty Ltd (in liq)[2022] NSWSC 271, in which former directors of the company in liquidation failed to set aside summonses for public examination on the basis of alleged non-disclosure by the liquidators.
Key Takeaways
This week’s TGIF examines the decision of the Supreme Court of New South Wales in In the matter of Jana Pty Ltd [2022] NSWSC 112, considering whether a ‘genuine dispute’ exists in relation to a debt claimed in a statutory demand where the debt arises from a poorly drafted deed.
Key Takeaways
This week’s TGIF considers Thorn (liquidator), in the matter of South Townsville Developments Pty Ltd (in liq) [2022] FCA 143 in which a liquidator sought approval to enter agreements to pursue litigation and suppression orders to protect the disclosure of commercially sensitive details.
Key Takeaways
Considerations of “environmental, social and governance” (or ESG) criteria with respect to a company’s management and operations continue to take on greater importance in lenders’ and investors’ credit and investment decisions. How a borrower or a target company measures up to these ever-developing ESG standards will impact its cost of capital and value to potential investors and acquirors.
This week’s TGIF considers Re C88 Project Pty Ltd [2022] NSWSC 126, a New South Wales Supreme Court case which provides guidance on the effect of omitting prescribed information, and including claims for disputed judgment interest, on the validity a statutory demand.
Key Takeaways