In the recent court decision of Trenfield v HAG Import Corporation (Australia) Pty Ltd [2018] QDC 107, the liquidators recovered unfair preferences from a retention of title creditor who argued it was a secured creditor.

The issues

In the recent decision of Heavy Plant Leasing [2018] NSWSC 707, a creditor successfully defended an unfair preference claim by establishing it did not have reasonable grounds to suspect the insolvency of the debtor company, who was a subcontractor in the earth moving business.

The most common way of defending a liquidator’s unfair preferences claim is to rely upon section 588FG(2) of the Corporations Act 2001(Cth); commonly called the ‘good faith defence’.

Commonly, a creditor being sued by a liquidator to refund an alleged unfair preference is owed money by the company in liquidation.

Liquidators argue that under section 553(c)(1) of the Corporations Act 2001 (Act) a creditor is not able to set-off the outstanding indebtedness owed by the company to the creditor to reduce any liability of the creditor to refund any unfair preference. Similar arguments are made by liquidators in relation to insolvent trading claims.

A snapshot of the court decisions

Tiuta International Ltd (In Liquidation) v De Villiers Surveyors Ltd [2017] UKSC 77

Overview

Carillion was perhaps best known for its public sector work. However, the insolvency of the UK’s second-largest construction company will inevitably have significant implications for the private sector.

Question

My client is buying a property from a receiver appointed under an equitable charge granted by a company which has become insolvent. The charge gives a receiver a power of sale and contains a power of attorney. Will the receiver be able to sign all the necessary documents to allow the transaction to proceed to completion?

Answer

On 11 September 2017, the Treasury Laws Amendment (2017 Enterprise Incentives No. 2) Bill 2017 was passed by the Senate. The Bill features two key changes to the Corporations Act:

Just because a liquidator asserts you have received an unfair preference, does not necessarily mean you have or that there are no potential defences available to you.

(1) Timothy Crowden and (2) Carol Crowden v. QBE Insurance (Europe) Limited [2017] EWHC 2597 (Comm)

Summary

This case involved a claim in respect of negligent investment advice brought directly against the insurer of an insolvent financial adviser, pursuant to the Third Parties (Rights against Insurers) Act 1930 (the “1930 Act”).

The insurer successfully relied on an insolvency exclusion clause contained within the insolvent adviser’s professional indemnity policy in order to deny liability to the claimants.

Case Facts

Global Corporate Limited v Dirk Stefan Hale [2017] EWHC 2277 (Ch) 

Summary

A recent judgment re-iterates the importance of carefully drafting a deed of assignment when assigning claims.

In Global Corporate, the liquidators of a company assigned certain claims by way of a deed of assignment to Global Corporate Limited (the “Assignee”). The Assignee (the Applicant in this case) then brought several claims against the company’s former director and shareholder.