Facts

Mr Lock and Mr Sheahan (the liquidators) performed their roles as administrators, and then as liquidators, of three companies.

The liquidators carried out numerous tasks across four work streams: (1) investigating the identities of a creditor and shareholders of one of the companies; (2) potential claims against the companies’ directors and a bank; (3) issues arising under the Proceeds of Crime Act 2002 (Cth); and (4) applications relating to receivers that had been appointed.

King (Trustee); In the matter of Zetta Jet Pte Ltd v Linkage Access Limited [2018] FCA 1979 is the latest in a series of decisions, across multiple proceedings, dealing with the dogged attempts of a United States bankruptcy trustee to recover a luxury yacht moored in Australian waters.

Cash flow is the life blood of the construction industry, goes the mantra. Construction projects often have long supply chains. When cash stops flowing down the chain, businesses can fail. There is all too much recent evidence of this.

Someone in the chain (say, a main contractor) could seek to provide in a contract that it does not have to pay the party below (subcontractor) until it has been paid by the party above (employer). This is a 'pay-when-paid' clause.

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).

In this proceeding, the Full Court of the Federal Court considered three main issues:

• whether certain on-lending arrangements gave rise to legitimate tax deductions for interest;
• duties and liabilities of directors who were not directly involved in the impugned transactions; and
• costs payable by a representative where claims were brought against the estate of a deceased director and the representative of that estate, in his own right.

Facts

Two companies which contended they were ‘unquestionably solvent’ were unsuccessful in an application to injunct a party from instituting proceedings to wind them up. This decision clarifies the extent to which the case law on abuse of process made prior to the enactment of Part 5.4 of the Corporations Act continues to apply.

Facts

In Longley v Chief Executive, Department of Environment and Heritage Protection [2018] QCA 32, the Queensland Court of Appeal has clarified the ability of liquidators to disclaim onerous property, including obligations that arise in respect of that property under State environmental legislation.

The Victorian Court of Appeal and a Full Court of the Federal Court have each recently held that the statutory priority regime applies to the winding up of companies that act as trustees of trading trusts, confirming that employee claims and a liquidator’s remuneration and costs are priority debts. Special leave to appeal the Court of Appeal’s decision has been sought.

If a transaction by a company amounts to an "unlawful distribution", and the company subsequently goes into liquidation, will an action for recovery of the benefits of that distribution, brought against the directors who authorised the transaction, be statute-barred if it is commenced by the liquidator of the company more than 6 years after the distribution was made?

Can you prefer one creditor by arranging a third party loan, the proceeds of which are paid directly to that creditor, without the arrangement being void against your trustee in bankruptcy? “Yes” says the Full Federal Court – thus confirming an important distinction between personal and corporate insolvency.

Rambaldi (Trustee) v Commissioner of Taxation, in the matter of Alex (Bankrupt) [2017] FCAFC 217