Following a recent government consultation, new draft legislation is expected this summer which will render HMRC as a “secondary preferential creditor” in insolvencies that commence on or after 6 April 2020. The government’s objective is to ensure that more tax which is collected on behalf of HMRC (circa £1.9bn) is actually paid to HMRC and used to fund public services, and is not distributed to pay other creditors.
Section 127 of the Insolvency Act renders void any disposition of property by a company made in the period between presentation of the winding up petition and the making of a winding up order on that petition unless the court orders otherwise. Guidance on applications for validation orders is given in the Insolvency Practice Direction (“PD”).
In its much anticipated decision, the High Court has unanimously dismissed the Amerind appeal.[1] This decision finally resolves recent uncertainty as to the proper application of trust assets in the liquidation of an insolvent corporate trustee.
In short, the High Court’s decision confirms that in the winding up of a corporate trustee:
The significance of this decision
On 3 May 2019, the Federal Court of Australia dismissed an application brought by the administrators of an oil and gas exploration company, Paltar Petroleum Limited (Paltar) to adjourn proceedings for the winding-up of the company in insolvency. The decision illustrates that the belated appointment of administrators appointed by directors in response to pending winding-up proceedings is unlikely to keep at bay the approaching fire of liquidation; indeed, it may accelerate it.
Background
The NSW Supreme Court has reaffirmed the criteria for a Court to inquire into a liquidator’s conduct. It is necessary to show that there is at least a ‘well-based suspicion’ indicating a need for further investigation. ‘Mere wondering’ is not enough.
In exercising its discretion, a Court will also consider the nature and gravity of the allegations against the liquidator, delays in seeking an inquiry, the utility of an inquiry and the existence of alternative remedies.
Background
The recent sale of Black Oak Minerals Limited (Black Oak) to Ramelius Resources Limited (ASX: RMS) (Ramelius) shows that section 444GA of theCorporations Act 2001 (Cth) (the Act) can be used to resurrect a company in liquidation.
The Commissioner of Taxation (Commissioner) recently issued draft taxation determination TD 2019/D2 (TD 2019/D2) dealing with the important question of a receiver’s obligation to retain money for post-appointment tax liabilities. A link to TD2019/D2.
The Personal Property Securities Register (PPSR) commenced operation on 30 January 2012. All seven-year registrations made on the:
- old state-based motor vehicle registers, immediately before the PPSR commenced; or
- PPSR immediately after it commenced,
will begin to expire shortly and this will have adverse consequences for secured parties who do not act to renew.
If you are a landlord where the tenant company goes into liquidation you should consider your options carefully before taking any action.
In such a case, the liquidator is able to disclaim “onerous property,” which is likely to include a lease at an open market (or similar) rent. The effect of the disclaimer is to bring the liability of the tenant company to an end as well as ending its interest in the property.
The latest decision in the external administration ofMirabela is a reminder of the utility of the section 424 directions process for receivers, and an example of the steps to be taken in the face of competing asset claims.
The Court directed that the receivers of Mirabela were justified in distributing sale proceeds of approximately US$59.5 million in the face of a third party claim to the proceeds, provided the receivers first gave 21 days’ notice of intent to do so.
The case is a timely reminder that: