The CVA challenge

The landlords’ claim against the Debenhams CVA was put forward on five grounds:

1. Future rent is not a “debt” and so the landlords are not creditors, such that the CVA cannot bind them

REJECTED: The definition of “debt” is broad enough to include pecuniary contingent liabilities, such as future rent.

2. A CVA cannot operate to reduce rent payable under leases: it is automatically unfairly prejudicial

Just a note to alert readers that the latest decision of interest in this post-Amerind world dropped today in the Federal Court in Queensland. The liquidators of an insolvent corporate trustee successfully obtained orders appointing them receivers of the assets of two trusts to enforce the rights of exoneration and liens of the former trustee. The application was contested by the new trustee of the property trust, who sought to sell the key asset itself (a hotel – freehold title to the land).

Less than four years after the last fiscal amnesty, on 5 August, the Romanian government published a fiscal amnesty ordinance (No. 6/2019) that sets the framework for restructuring the debt of taxpayers with outstanding tax obligations and for the cancellation of accessory obligations.

On 13 June 2019 the new Insolvency Law(DIFC Law No. 1 of 2019) and the associated Insolvency Regulations 2019 (the “Law”) came in to effect in the Dubai International Finance Centre (“DIFC”) repealing and replacing the DIFC’s Insolvency Law of 2009 (the “Old Law”).

A recent High Court decision considered the duty of Law of Property Act (LPA) receivers when selling secured property to an associated company of the creditor. The LPA receivers were chartered surveyors, appointed by the creditor in respect of a cider factory over which it had security and were alleged to have acted in bad faith by preferring the interests of the creditor over the interests of the debtor company.

Recently the Victorian Court of Appeal upheld a decision to deny liquidators approval of a proposed settlement in McDermott and Potts as liquidators of Lonnex Pty Ltd (in liquidation) [2019] VSCA 23. The creditors had been opposed to the settlement.

Background

A real, as opposed to remote, risk of insolvency is not necessarily enough for the duties of a board of directors to switch from being owed to its shareholders to being owed to its creditors.

This Monday 5 February 2019 is shaping up to be a pretty big day. As has been well covered in the press, the final report by of the Banking Royal Commission has now been handed to the Governor-General and will be publicly released on Monday afternoon at 4.10pm, coinciding with the sharemarket close. Reportedly Commissioner Kenneth Hayne’s final report stretches to more than 1000 pages.

A Court of Appeal decision last week has broadly upheld previous TCC guidance as to the ability of companies in liquidation or those subject to CVAs to commence and enforce adjudication proceedings against their creditors. Although theoretically possible, adjudication proceedings commenced by companies in liquidation are now liable to be restrained by a court injunction.  Adjudications by companies subject to a CVA are more likely to be appropriate and, depending on the circumstances, may be enforced without a stay of execution.

Insolvency set-off: a recap

Introduction

In Botsman v Bolitho [2018] VSCA 278, the Court of Appeal unanimously allowed an appeal from the decision of Croft J to approve the settlement of two related proceedings arising from the failed merger of Banksia Securities Limited (Banksia) and Statewide Secured Investments Limited (Statewide).