In ACN 093 117 232 Pty Ltd (In Liq) v Intelara Engineering Consultants Pty Ltd (In Liq) [2019] FCA 1489, the court considered whether a “legal phoenix” arrangement entered into after receiving professional advice was in fact a voidable transaction.

The facts

Intelara Pty Ltd (OldCo) operated an engineering consultancy business and after experiencing financial difficulties in 2014 sought professional advice concerning the potential restructure of the company.

In KSK Holdings (Australia) Pty Ltd (in liquidation) [2019] NSWSC 1463 a liquidator sought directions from the Supreme Court of New South Wales under section 90-15(1) of the Insolvency Practice Schedule (Corporations) at Schedule 2 of the Corporations Act 2001 (Cth).

In Clifton (Liquidator) v Kerry J Investment Pty Ltd trading as Clenergy [2020] FCAFC 5, the Full Court of the Federal Court of Australia found that:

This is often a question for faced by office-holders of insolvent companies when investigating a company’s affairs, and more of a concern for former directors and shareholders when potentially facing a claim for the return of unlawful dividends or misfeasance.

TV rental business, Box Clever, was created as a joint venture between Granada (now ITV) and Thorn (now Carmelite).

The Box Clever business was later sold and administrative receivers were subsequently appointed over Box Clever companies.

The Pensions Regulator (“TPR”) issued Financial Support Directives (“FSDs”) against five ITV companies in relation to the Box Clever defined benefit pension scheme. ITV referred the determinations to the Upper Tribunal.

In the wake of the Carillion insolvency and the Toys R Us administration, there are contrasting tales from two different UK businesses.

The engineering business Rolls-Royce is going against the trend and has announced that it will keep its defined benefits pension scheme open for current members until January 2024.

The scheme is running at a £1.4 billion surplus, which will also allow the company to decrease its contributions to its defined benefit retirement fund by £145 million over the next three years.

At the start of 2017, UK businesses had reported a 33% risk of insolvency, compared to the end of 2017 which saw that figure increase to nearly 40%.

These figures were calculated by drawing together key performance indicators including balance sheets and records of the directors’ successful (or unsuccessful) directorship history.

What happens if a debtor is made bankrupt after a creditor has issued debt recovery proceedings?

A bankruptcy debt is any debt that the bankrupt owed to the relevant creditor at the date of the bankruptcy order, or a debt which arises under an obligation incurred by the debtor before the bankruptcy order, but one which falls due after the date of the bankruptcy order (known as contingent debts).

The Insolvency Service has just released its personal insolvency statistics for 2017 revealing an upturn in overall personal insolvencies (just under 10% more than in 2016) and an increase of around 1/5th (19.8% on 2016) of people entering into Individual Insolvency Arrangements (IVAs). More people entered into IVAs last year than in 2008 (when many consider the credit crunch took its grip).

In light of the business news over the last year, including the most current news of Carillion, it is important to know how business failure impacts on employment rights.