Prior to March 2017, any right to sue that comprised an asset of a bankrupt’s estate could only be litigated by the trustee of the bankrupt. The inability of a trustee to assign a bankrupt’s cause of action resulted in many such actions not being litigated due to factors such as a lack of resources. This position changed through the insertion into the Bankruptcy Act 1966 (Cth) in Schedule 2 of the Insolvency Practice Schedule (Bankruptcy), which expressly permits a trustee to assign to a third party any right to sue that is held by of a bankrupt estate (see section 100-5).

Can an adjudicator have jurisdiction over claims for sums owed to a referring party in liquidation? The TCC has decided in Lonsdale v Bresco that insolvency set-off precludes adjudication of such claims.

Background

Bresco had agreed to perform electrical installation works for Lonsdale in August 2014. Those works were not completed and both parties alleged wrongful termination. Bresco later became insolvent and entered into liquidation in March 2015.

The Limitations Act 1969 (NSW) (Limitations Act) establishes time limits within which plaintiffs must commence civil proceedings, including for the recovery of a debt. A failure to bring a claim within the relevant time period results in the claim lapsing, and the creditor losing its rights to enforce its debt. Accordingly, it is critical that creditors understand how the law restricts their ability to collect debts and any exceptions that they may rely upon as the limitation date approaches.

The question in Pleash (Liquidator) v Tucker [2018] FCAFC 144 (29 August 2018) was whether financial documents of a discretionary trust ought to be produced for the purpose of a liquidator investigating the ability of an examinee (and former director of the company) to satisfy any judgment debt that may be obtained against him.

The revised Practice Direction: Insolvency Proceedings

July 2018

Ordinarily, a company entering liquidation is considered the commercial equivalent of “game over”, “checkmate”, “the end”, “K.O” or whatever other synonyms creditors can conjure up. This would be true for the most part because, at the end of the liquidation process, the company is usually deregistered and ceases to exist.

However, in some cases it is possible for the liquidator, a creditor or a “contributory” (member) of the company to apply to the Court for an order terminating the winding up. If made, this would return control of the company to the directors.

The statutory demand is a formidable card up a creditor’s sleeve that can result in a company being deemed to be insolvent if it does not pay the creditor’s debt within 21 days of service of the demand. Whether a statutory demand served on an incorporated body other than an Australian company will be effective largely depends on the State or Territory in which the incorporated body is based and whether it is served pursuant to the correct section of the Corporations Act 2001 (Cth) (Corporations Act).

What is a statutory demand?

You have instructions to commence proceedings for damages for personal injury against a defendant company only to find that the company has entered in to a Company Voluntary Arrangement (“CVA”). What procedural issues arise and what steps should be taken?

What is a CVA?

The long-awaited new Practice Direction – Insolvency Proceedings (PDIP), which came into force on 25 April 2018, has now brought procedure into line with the changes introduced by the significant amendments to the Insolvency Act 1986 (the Act) introduced last year and the Insolvency (England and Wales) Rules 2016 (IR 2016), as amended. This has finally brought to an end the agonisingly long period (over 12 months) in which the provisions of the previous Practice Direction have been at odds with the Act as amended and IR 2016.

In light of the radically and rapidly changing face of bricks and mortar retail, cases providing guidance on the way in which liabilities are to be dealt with in the course of the restructuring / insolvency process are extremely valuable not only for stakeholders and practitioners dealing with the consequences of those processes but also to those guiding and devising the strategies in the first instance.

Wright and Rowley v Prudential Assurance Company Limited is one such case arising out of the collapse of the British Home Stores (‘BHS’) retailing group in 2016.