The Australian Government has accepted certain recommendations of the Productivity Commission's long-awaited Report on Business Set-up, Transfer and Closure, in an attempt to change the focus of Australia's insolvency laws from "penalising and stigmatising business failure”, according to the Minister for Small Business and Assistant Treasurer, the Hon Kelly O'Dwyer MP.
It has expressed a willingness to legislate to introduce at least two main changes:
In Aventura2, a recent decision of the Ontario Superior Court of Justice (Commercial List) (the “Court”), the Honourable Justice Penny confirmed that a bankruptcy trustee does not have the authority, pursuant to section 30(1)(k) of the Bankruptcy and Insolvency Act (the “BIA”), to disclaim a lease on behalf of a bankrupt landlord. Rather, a trustee’s authority to disclaim a lease is limited to situations where the bankrupt is the tenant.
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It's unclear that safe harbours by themselves will provide genuine opportunities for restructuring distressed businesses.
The Productivity Commission's upcoming report on corporate insolvency will address two burning issues: ipso facto clauses and how to encourage directors to save financially-stressed companies.
On October 13, 2015, the Court of Appeal for Ontario (the “Court”) dismissed the so-called “interest stops rule” appeal in the Nortel matter,[1] thereby confirming that the rule applies in proceedings under the Companies’ Creditors Arrangement Act (the “CCAA”). The Court’s decision also appears to eliminate any suggestion that the rule only applies to so-called “liquidating” CCAA proceedings.
There's been a drop-off, but Peter Bowden says things might be about to change.
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A section 439A report must contain all material information which is known or reasonably ascertainable by administrators.
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A DOCA can extinguish claims under a guarantee, even where those claims arise following the DOCA's termination.
If the underlying debt has already been extinguished by a DOCA, can a secured creditor still enforce the charge? A recent case explored the role of section 444D(2) of the Corporations Act in this situation, with implications for parties seeking to rely on guarantees from companies that have been through a DOCA (Australian Gypsum Industries Pty Ltd v Dalesun Holdings Pty Ltd [2015] WASCA 95).
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Section 562A of the Corporations Act does not apply where liquidator realises a sum of money by assigning the proceeds of the reinsurance claim to a third party.
Liquidators of insurance companies face a major quandary when assessing reinsurance recoveries.
A new Court decision may undercut the legislative policy that reinsurance proceeds should be quarantined from the normal rules for paying out creditors of insolvent companies.
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These three cases illustrate that strict compliance with legislative requirements continues to be imperative when serving statutory demands.
Despite what appears to be a fairly straightforward legislative regime, creditors' statutory demands appear to generate an entirely disproportionate volume of litigation in the courts. The drastic consequences of failing to comply with a creditor's statutory demand warrant very strict compliance by creditors with the technical requirements of the regime.
On May 1, 2015, the Alberta Court of Appeal rendered its decision in 1773907 Alberta Ltd. v. Davidson, 2015 ABCA 150, and allowed an appeal permitting an action, brought in the name of an insolvent company, to proceed, notwithstanding that the company had assigned this claim to a third party. As will be discussed, the assignment of an action to a third party is often found to be caught by the doctrines of champerty and maintenance, and the decision by the Court serves to identify where such an assignment will be permitted.