Cross-border insolvency has ventured into new territory as a judgment is released from the first contemporaneous sitting of the Federal Court of Australia and the High Court of New Zealand.
Section 90-15 of the Insolvency Practice Schedule (the IPS) confers on Courts wide powers to adjust rights related to companies in external administration. Here, the administrators of a mining group obtained orders approving their entry into a deed to fund the ongoing operation of the group pending sale and limiting their liability under the deed to the company’s assets. The Court accepted the administrators’ evidence that this funding was urgently required to continue the Group’s operations pending a sale, the prospects of which were thereby maximised.
In Re China Huiyuan Juice Group Limited [2020] HKCFI 2940, Harris J discussed in detail the difficulties which liquidators appointed in Hong Kong over a foreign incorporated holding company may have in obtaining control of operating subsidiaries in the Mainland, if the group’s structure includes intermediate subsidiaries incorporated in the British Virgin Islands (the “BVI”).
A trio of landmark decisions by Mr Justice Harris have altered and hugely improved the scheme of arrangement practice in Hong Kong. The new scheme practice points are in brief thus:
First, where an offshore incorporated company seeks to restructure its debts by means of a Hong Kong scheme of arrangement, it should not at the same time pursue a parallel offshore scheme just because it is incorporated offshore. Any such parallel scheme must be justified. Pursuing an unnecessary parallel scheme could entail the following consequences:
A trio of landmark decisions by Mr Justice Harris have altered and hugely improved the scheme of arrangement practice in Hong Kong. The new scheme practice points are in brief thus:
First, where an offshore incorporated company seeks to restructure its debts by means of a Hong Kong scheme of arrangement, it should not at the same time pursue a parallel offshore scheme just because it is incorporated offshore. Any such parallel scheme must be justified. Pursuing an unnecessary parallel scheme could entail the following consequences:
The last 12 months has seen a number of court applications being made for extensions of time to register a security interest under s293 of the Personal Property Securities Act 2009 (Cth) (PPSA) and/or s588FM of the Corporations Act 2001 (Cth), to avoid collateral vesting in the grantor upon an insolvency event.
On 10 May 2021 in Badenoch Integrated Logging Pty Ltd v Bryant, in the matter of Gunns Limited (in liq)(receivers and managers apptd)[i] the Full Court of the Federal Court of Australia abolished the application of the Peak Indebtedness Rule to a running account ‘single transaction’ under section 588FA(3) of the Corporations Act 2001 (Cth) (the Act) in unfair p
In Bechara v Bates,[1] the Full Federal Court reminds us of the proper procedure for review of a sequestration order made by a registrar. This case raises an important point about bankruptcy practice and procedure in the Federal Circuit Court and the Federal Court.
In Ross, in the matter of Print Mail Logistics (International) Pty Ltd (in liq) v Elias,[1] the Federal Court considered the extent to which a Jones v Dunkel[2] inference can be made.
A Word of Counsel 9 1. In Hung Yip (HK) Engineering Company Ltd v Kinli Civil Engineering Ltd [2021] HKCFI 153, Harris J reminded practitioners of the true principles applicable to an injunction restraining the presentation of a winding-up petition. Prior to this judgement, it would be fair to say that a number of practitioners had proceeded on the assumption that the hurdle for an applicant to cross was effectively the same as that to defeat a creditor's petition. Introduction 2.