Whilst the power of a chairperson to exercise a casting vote at creditors’ meetings is a useful mechanism to resolve a deadlock in voting, it does not confer unconstrained discretion. The recent Glenfyne Appeal[1] provides valuable guidance as to the appropriate exercise of a casting vote and also serves as a reminder of the Court’s significant powers to review and reverse failed creditors’ resolutions due to the exercise of a casting vote.
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:
WHO SHOULD READ THIS
- Insolvency practitioners, mortgagees or other secured creditors and their advisors.
THINGS YOU NEED TO KNOW
- Whilst the foreign resident capital gains withholding provisions (FRCGW) contain insolvency exceptions that exclude most asset disposal transactions undertaken in the insolvency area, it is important to recognise that not all insolvency transactions are excluded. Transactions by a mortgagee in possession may not be excluded.
WHAT YOU NEED TO DO
WHO SHOULD READ THIS
- Restructuring and insolvency professionals.
THINGS YOU NEED TO KNOW
- Understanding liabilities from a payroll tax perspective can be complex, particularly due to the broad nature of the grouping provisions.
- Unless care is taken situations may arise where restructuring and insolvency professionals will be grouped with client entities, potentially exposing personal entities to joint and several liability for client entity debts.
WHAT YOU NEED TO DO
Readers will recall that on 23 September 2016 we posted an article about recognition under the UNCITRAL Model Law on Cross-Border Insolvency (Model Law) of the Korean rehabilitation proceedings for Hanjin Shipping.
The insolvency profession (and the Queensland market in particular) has been abuzz this year with the issue of CORA – a shorthand reference to theEnvironmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld).
What does it mean for insolvency practitioners? Can banks really be hit with a bill to clean up their borrowers’ environmental damage? Will turnaround and restructuring professionals refuse to accept appointments out of fear of falling foul of the new regime?
This post explains what you need to know.
‘Shipping steel, shipping steel . . .
Nobody knows, the way it feels
Caught between Heaven and the Highway
Shipping steel, shipping steel . . .’ 1
On 7 April 2016, Administrators were appointed to South Australian-based steelmaker and iron ore miner Arrium, which reportedly owed approximately AUD4.3 billion to its lenders, suppliers and staff. The appointment covered 94 direct and indirect subsidiaries of Arrium Limited (the Arrium Companies), which at the time employed around 8,100 employees and contractors.
Unscrupulous advisors, unconscionably preying on desperate directors driven by the fear of losing everything, have created a boom in illegal phoenix activity. The below article, originally published on the McCullough Robertson white collar crime blog, Collared, sheds some light on the illegal phoenix, the gravity of the problem in Australia and considers what is being done to monitor and control the issue.