Section 433 of the Corporations Act 2001 (Cth) (the Act) concerns the payment to employees as priority creditors by a receiver from the assets subject to a circulating security interest. The provision in large part mirrors the payment waterfall contained in section 556 that applies in a winding-up.

There are a number of reasons why liquidators might want to slow things down when it comes to commencing or prosecuting proceedings. A liquidator might want more time to fully investigate certain claims or secure appropriate funding before incurring substantial costs or adverse costs exposure. While there are options available to liquidators looking to delay either the commencement or service of a particular proceeding, each comes with its own risks.

The Federal Government has released the Exposure Draft for the much anticipated introduction of:

The High Court of Australia recently dismissed an application brought by former Queensland Nickel Pty Ltd (QN) directors Mr Clive Palmer and Mr Ian Ferguson for a declaration that section 596A of the Corporations Act 2001 (Cth) is constitutionally invalid.

As you may recall, in 2013 ASIC wrote to all liquidators to announce the commencement of an industry-wide project to test all registered liquidators’ compliance with the requirement to publish certain notices on ASIC’s “published notices website” and to lodge forms with ASIC. ASIC refers to this initiative as the “PNW Project”.

“Whenever any person (hereinafter called the insurer) is obliged to indemnify another person (hereinafter called the insured) in respect of any liability incurred by the insured towards a third party, the latter shall, on the sequestration of the estate of the insured, be entitled to recover from the insurer the amount of the insured’s liability towards the third party but not exceeding the maximum amount for which the insurer has bound himself to indemnify the insured” – s156 of the Insolvency Act, No 24 of 1936 as amended (Act).

A spate of recent decisions approving liquidators’ remuneration on an ad valorembasis had caused some trepidation amongst insolvency practitioners facing the prospect of court fee approval.

A recent decision by the Federal Court of Australia may be useful for liquidators faced with an application to commence or continue civil proceedings against a company in liquidation.

The decision – in brief

In the case of BP Southern Africa (Pty) Ltd v Intertrans Earl SA (Pty) Ltd & Others (34716/2016) [2016] ZAGPJHC 310 (25 November 2016), the court had to consider two important issues: firstly, whether suspension of a contract by the business rescue practitioner in terms of s136(2)(a)(i) and (ii) of the Companies Act, No 1971 of 2008 (Act) suspends not only the obligations of the business rescue practitioner to perform in terms of the contract entered into between the parties, but whether it also suspends the obligations of the other contracting parties.

The creditors of a company in financial distress are often faced with various options. A debtor company can either be liquidated, placed in business rescue or enter into a compromise with its creditors without first being placed in liquidation. Although an offer of compromise, at first glance, may seem very attractive to creditors, there may be many pitfalls of which creditors must be aware.