There is an expectancy of an increase in this area, together with a rise in distressed mergers and acquisitions activity, writes William Greensmyth of Walkers Ireland.

Corporate insolvency rates have been relatively low during the pandemic, but as government support measures fall away, there is an expectancy of an increase in corporate restructurings, together with an increase in distressed M&A activity.

In a recent case involving key stakeholders in the ‘Century Mine’ (Mine) – located in the lower Gulf of Carpentaria region in Northwest Queensland – the Supreme Court of Queensland considered an application brought by a liquidator and creditor for the termination of a winding up of pursuant to section 482(1) of the Corporations Act 2001 (Cth) (Application).

Background

The Mine was operated by Century Mining Ltd (formerly Century Zinc Ltd) (Century). It was one of the largest zinc mines in the world.

Mr Badcock (the Respondent) was an undischarged bankrupt, and Mr Ambrose (the Applicant) was the trustee of his bankruptcy. The key issue for determination was the definition of property under the Bankruptcy Act, and whether the moving of monies into an interesting-bearing account by the Respondent was sufficient to change the character of income to after-acquired property which would vest in the Trustee’s Estate.

Litigation funding can play an important role in allowing liquidators to recover debts on behalf of liquidated companies, where there may be a real prospect of success in recovery proceedings but where obstacles such as funding or security for costs may present themselves.

The impact of Covid-19 is clearly the big talking point for 2022, with several questions arising: will new variants emerge, what steps will governments take to limit the spread, and what impact will it have on industries? To date, enforcement actions, insolvencies and restructurings have been relatively light, but with new restructuring legislation reforms on the horizon, and creditors starting to ramp up speed to enforcement, it appears likely that there will be an increase in winding up and cross-border restructuring work.

InAustralian Securities and Investments Commission v Marco (no 9) [2021] FCA 1306 the Administrators brought an interlocutory application seeking remuneration orders pursuant to section 60-10(1)(c) of the Insolvency Practice Schedule (IPSC) for the administration of the second defendant. The application was opposed by the Liquidators of the second defendant.

Where a shareholder has redeemed his shareholding following a failed investment without objection some months prior to the initiation of a voluntary liquidation, the Court will not permit him to use the statutory deferral provisions relating to voluntary liquidations for an abusive or improper purpose. This includes using such proceedings as leverage to exert undue pressure in proposed claims against the company or directors.

Passing the Golden Thread through the Eye of a Needle In Singularis 1 , as is well known, the Privy Council Board considered the doctrine of modified universalism whereby, broadly speaking, a court will give such assistance as it can to foreign insolvency proceedings, as is consistent with local law and local public policy, so as to ensure that a company's assets are distributed under a single system; and held by a majority that there is a common law power to assist a foreign insolvency, although the power could not be used to enable foreign liquidators to do something that they could not d

In Anchorage Capital Master Offshore Ltd v Sparkes (No 3); Bank of Communications Co Ltd v Sparkes (No 2),[1] the NSW Supreme Court handed down judgment in two proceedings (which were heard together) arising from the failure of Arrium and its broader corporate group.

On 10 September 2021, Chief Justice Smellie QC in Re Premier Assurance Group SPC Ltd. (in Official Liquidation) sanctioned a streamlined adjudication process proposed by the joint official liquidators ("JOLs") of Premier Assurance Group SPC Ltd (in Official Liquidation) (the "Company"), circumventing the requirement for thousands of participants to lodge separate proofs of debt in an insolvent liquidation.