Section 262(1) of the IA 1986 provides that a debtor, creditor or nominee may apply to the court where: (a) a voluntary arrangement approved by a creditors’ meeting summoned under section 257 unfairly prejudices the interests of a creditor of the debtor, or (b) there has been some material irregularity at or in relation to such a meeting. 

The assignment of debts is common in many transactions - from the sale of businesses to restructuring scenarios.

Assigning a debt requires written notice of the assignment being given to the debtor.  Under conveyancing legislation this notice can be given by either the assignor or assignee (for example, section 12 Conveyancing Act (NSW)).

Additional rules now apply for debts captured by the Personal Property Securities Act (PPSA).

The Corporations Act (the Act) permits a liquidator to claw back preferential payments made to an unsecured creditor within the six (6) month period prior to the winding up: section 588FA of the Act.

The High Court has recently affirmed the existence and scope of a liquidator’s equitable lien in Stewart v Atco Controls Pty Limited (in liquidation) [2014] HCA 15.

A liquidator is entitled to an equitable lien for the costs, charges and expenses (including the liquidator’s remuneration) incurred by the liquidator in realising assets brought into the estate, which lien takes priority over a creditor’s security: Re Universal Distributing Co Ltd (in liquidation) [1933] HCA 2.

A recent decision of the Supreme Court of Western Australia highlights the importance of properly registering security interests under the Personal Property Securities Act 2009 (Cth) (the Act).

Introduction

Early in his or her appointment a liquidator in a creditors' voluntary liquidation (CVL) should consider applying to the Court to convert the CVL to a Court ordered winding up in insolvency.  Conversion may benefit the unsecured creditors, in whose interests the liquidator acts, by enabling the liquidator to pursue claims and make recoveries not available in a CVL. 

The reasons liquidators have applied for conversion include:

Voluntary administrators frequently obtain Court orders permitting notices to be issued to creditors electronically. Such orders are made under section 447A of the Corporations Act (the Act) on grounds of efficiency, cost and necessity. See Mothercare Australia Ltd (Administrators Appointed) [2013] NSWSC 263 and Creative Memories Australia Pty Ltd [2013] NSWSC 1294.

Introduction

The Full Court of the Federal Court of Australia has rejected an argument that the applicant for an order for a company to be wound in insolvency must prove that the company was insolvent at the "relation-back day" in addition to proving insolvency at the date of filing the application and the date of the hearing.