The limitations of set-off in a liquidation scenario and the nature and effect of a security interest under the Personal Property Securities Act 2009 (Cth) (PPSA) have been clarified, with significant ramifications for principals and financiers, who should now review their rights, following the WA Supreme Court's decision in Hamersley Iron Pty Ltd v Forge Group Power Pty Ltd (In Liquidation) (Receivers and Managers Appointed) [2017] WASC 152 (Clayton Utz acted for the successful receivers).

Safe harbour and ipso facto clauses reforms are closer, with the consultation on the Insolvency Laws Amendment Bill 2017 having closed last week, but further work is needed.

The Federal Government's consultation on the safe harbour and ipso facto reforms in the draft Insolvency Laws Amendment Bill 2017 closed on 17 May 2017, so we now have a better idea of what they will look like.

Assets held by an insolvent corporate trustee in its capacity as trustee may not be "property of the company".

For more than 30 years, Victoria has stood apart from the rest of Australia in how it treats the assets of an insolvent corporate trustee. That may have changed, following the Supreme Court's decision in Re Amerind Pty Ltd (receivers and managers appointed) (in liq) [2017] VSC 127.

The Court of Appeal (CICA) has provided further clarification and guidance to Cayman Islands insolvency professionals on issues ranging from voidable transactions, the scope of liquidators’ powers and legal professional privilege, following the publication this month of a number of decisions that had come before the Court during the November 2016 Court sitting. Set out below is a summary of the Court’s findings in 3 of the CICA decisions which may be relevant to your day to day practice.

Voidable Transactions

In this thoroughly new and groundbreaking case it was held that where a creditor has already filed a winding up petition in respect of a company: (1) not only may the directors of the company parry by themselves applying for the appointment of JPLs; but (2) they may do so even without a shareholder resolution or express provision to do so in the company’s articles of association.

The last decade has exposed the bankruptcy courts across the globe to a large volume of international work, and with that experience in mind, the Judicial Insolvency Network (JIN) held its inaugural meeting in Singapore in late 2016. Its intent was to formulate a set of guidelines (theGuidelines) that would promote cooperation between Courts. Sitting alongside common law and legislative cross-border provisions, the Guidelines are a practical code to enhance some of the most successful cross-border initiatives of recent years.

In an era of increasing complexity in regulation globally, the BVI has carefully built a simple and clear regulatory framework that minimises the legal risk for lenders and financial markets participants dealing with BVI companies.

Legal

The BVI’s regulatory framework is structured to make the legal risk of lending or selling financial assets to a BVI entity lower than almost any other jurisdiction.

In a recent decision in the case of TIPP Investments PCC v. Chagala Group Ltd. et al (BVIHCM 102/2016), Mr Justice Davis-White clarified the issue of the standing of beneficial shareholders that we highlighted in our previous article.

We are seeing attempts by the Chinese Government to provide the market with more sophisticated tools for dealing with unprofitable companies.

China is attempting to align its insolvency regime to international standards and introduce additional tools for dealing with the country's rising debt load.

Australian lenders with exposures to these debts (particularly in the coal, steel, manufacturing, cement, shipbuilding, solar, heavy machinery, mining and property sectors) should reassess insolvency risk and understand their options.

Section 97 of Bermuda’s Companies Act 1981 imposes a statutory duty on every director to: (a) act honestly and in good faith with a view to the best interests of the company; and (b) exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances. The test is therefore an objective one using the reasonably prudent person as a comparator (see Focus Insurance Co Ltd v Hardy [1992] Bda LR 25 which appears to suggest that an element of subjectivity may also be considered in Bermuda.