- On 18 September 2017 the Treasury Law Amendment (2017 Enterprise Incentives No. 2) Act 2017 (the Safe Harbour and Ipso Facto Act) became law.
- The Safe Harbour reforms introduced in the Safe Harbour and Ipso Facto Act create a safe harbour for company directors from personal liability for insolvent trading if the company is undertaking a restructure outside formal insolvency processes.
Division 65 and the New Strict Liability Regime
As part of the significant reforms to insolvency and bankruptcy laws introduced by the Insolvency Law Reform Act 2016 (ILRA), parliament has sought to condense and simplify the requirement for external administrators to avoid conflicts of interest.
Re Diffraction Diamonds DMCC [2017] EWHC 1368 (Ch)
This case deals with the English Court’s jurisdiction to wind up foreign companies, on the grounds of public interest. While it does not create new law, it is a helpful review of the authorities, particularly Re Titan International Inc [1998] 1 BVLC 102 (“Titan”).
Case Facts
Whether you are a liquidator, director, employee, shareholder or creditor of a company in financial distress, the experience of a corporate insolvency is usually not pleasant. Directors face the threat of being investigated for breaches of directors duties, employees become unemployed, shareholders become the owners of worthless assets and creditors are forced to come to the realisation that they will never see the money owed to them (or at least not all of it).
We all know that Australians have an unhealthy obsession with owning their own home. And with house prices surging over the past 5 years there is every right to be obsessed. But why sacrifice so much to purchase your dream home only to watch it fall into the hands of creditors?
The recent decision of Markovic J in Robert Kite and Mark Hutchins in their capacity as liquidators of Mooney’s Contractors Pty Ltd (in liq) & Anor v Lance Mooney & Anor [2017] FCA 653 in the Federal Court of Australia provides practitioners with further clarification of the requirements when insolvency practitioners are appointed to companies which operate as corporate trustees.
KEY TAKE-HOMES FOR INSOLVENCY PRACTITIONERS
This case raised the issue of when a company in financial distress (or the directors of that company) should issue a Notice of Intention to Appoint an Administrator (“NOITA”) which affords a moratorium under Schedule B1 of the Insolvency Act 1986 (“IA86”).
Back in March 2017 the NSW Court of Appeal handed down the unanimous decision in Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liq) v Sakr [2017] NSWCA 38 (Sakr), reigning in Brereton J’s application of proportionality to liquidator’s remuneration. This week the decision of in the matter of Australian Company Number 074 962 628 Pty Ltd (in liq) (formerly Colonial Staff Super Pty Ltd) [2017] NSWSC 370 (Colonial Super) was handed down by the NSW Supreme Court. The decision is notable as one of the first applications of the principles enunciated in the Sakr decision.
On 9 March 2017 the NSW Court of Appeal handed down its decision in Sanderson as Liquidator of Sakr Nominees Pty Ltd (in liquidation) v Sakr [2017] NSWCA 38, unanimously allowing the liquidator’s appeal against a decision of Brereton J applying principles of proportionality and ad valorum to reduce the liquidator’s outstanding remuneration from the $63,000 claimed by the liquidator to $20,000.