Safe harbour and ipso facto clauses reforms are closer, with the consultation on the Insolvency Laws Amendment Bill 2017 having closed last week, but further work is needed.
The Federal Government's consultation on the safe harbour and ipso facto reforms in the draft Insolvency Laws Amendment Bill 2017 closed on 17 May 2017, so we now have a better idea of what they will look like.
Today, thanks to the high-cost of current court fees, small to medium-sized enterprises (SMEs) face the problem of not getting paid by a customer and then, subsequently, not being able to go to court to get paid.
On 6 April 2017, the Insolvency Rules 2016 came into force. The new rules aim to modernise the insolvency process; and make it more efficient. Physical meetings, as the default decision making process, have been abolished. Where the debtor ‘customarily’ communicated with a creditor by way of email notices can be served by email under deemed consent, rather than through the post. The rules also introduce the use of websites to publish notices, without the need to inform creditors of any postings.
When someone is made bankrupt, all property owned by them, at the date of bankruptcy, forms part of the bankruptcy estate. Property not only includes physical assets, such as goods, land and money, but also intangible assets, such as a cash balance with a bank, debts, benefits under contracts, legacies and causes of action. These assets are known as ‘things in action’. The bankruptcy estate vests in a trustee in bankruptcy upon appointment.
Assets held by an insolvent corporate trustee in its capacity as trustee may not be "property of the company".
For more than 30 years, Victoria has stood apart from the rest of Australia in how it treats the assets of an insolvent corporate trustee. That may have changed, following the Supreme Court's decision in Re Amerind Pty Ltd (receivers and managers appointed) (in liq) [2017] VSC 127.
How can I protect my company from cash flow problems due to outstanding payments?
It is well worth keeping a close eye on your customers to spot any early signs of financial distress and act quickly.
We are seeing attempts by the Chinese Government to provide the market with more sophisticated tools for dealing with unprofitable companies.
China is attempting to align its insolvency regime to international standards and introduce additional tools for dealing with the country's rising debt load.
Australian lenders with exposures to these debts (particularly in the coal, steel, manufacturing, cement, shipbuilding, solar, heavy machinery, mining and property sectors) should reassess insolvency risk and understand their options.
In May 2015, I wrote an article about the conflicting lower court decisions in Raithatha –v- Williamson and Horton –v- Henry, concerning undrawn pension entitlements and income payment orders. The Court of Appeal has now finally handed down its long expected Judgment.
When someone is made bankrupt, their interest in the family home vests automatically in their Trustee in Bankruptcy, upon his or her appointment. The Trustee has 3 years from the date of the bankruptcy order to realise this interest. The Trustee will first of all ask if a third party is willing and able to purchase the Trustee’s share, usually 50% of the available equity. If that is not possible, then the Trustee will request that the property is put on the market for sale. As a last resort, the Trustee can apply to the Court for an order for possession and sale of the property.
Under the insolvency legislation, any dispositions of property or payments made by a company after it has been presented with a winding up petition are void, unless validated by the Court.