In Short

The Situation: When determining and quantifying unfair preference claims in Australia, does the Corporations Act permit liquidators to value transactions forming part of a single "continuous business relationship" (such as a running account) from the point of peak indebtedness, even if doing so disregards earlier transactions that might act to reduce the value of the claim against the creditor?

This week’s TGIF considers the recent decision of the NSW Court of Appeal in the Arrium liquidation, where the Court set aside examination orders sought for the purpose of a possible shareholder class action.

Key takeaways

Many companies are under financial pressure in the COVID-19 era as a result of revenue substantially reducing, debts not being paid when due and supply chains being disrupted. Even companies with financial reserves are finding themselves under pressure as measures taken by state and the Federal governments to reduce the spread of the virus are expanded and extended.

Administrators unsuccessfully argued that rent incurred during the administrators’ statutory “no personal liability” period was an unsecured debt which would not enjoy priority in the event the relevant companies went into liquidation.

Key takeaways

Caron and Seidlitz v Jahani and McInerney in their capacity as liquidators of Courtenay House Pty Ltd (in liq) and Courtenay House Capital Trading Group Pty Ltd (in liq) (No 2) [2020] NSWCA 117

In part 2 of this 3-part series, Omni Bridgeway turns to Nathan Landis, an Investment Manager based in our Perth office, Shane Taylor, a Business Development Director based in our Sydney office,

Ford (Administrator), in the matter of The PAS Group Limited (Administrators Appointed) v Scentre Management Limited [2020] FCA 1023

Following the recently announced extension of the JobKeeper programme and the Federal Government’s Budget Update, we revisit the relief measures available to corporations experiencing financial distress during the COVID-19 pandemic, which are currently scheduled to end in September.

Temporary measures scheduled to end on 24 September 2020

Recent changes to the Property Law Act 1974 (Qld) (Act) have simplified the process for mortgagees exercising power of sale and do away with the need for a Court order.

Previously, a mortgagee was required to apply to a Court for a vesting order allowing it to exercise power of sale and to dispense with the requirement to give a Notice of Exercise of Power of Sale to the mortgagor.

Since late March 2020 there has been a steady stream of voluntary administrators seeking the assistance of the court to limit their personal liabilities under the Corporations Act (Cth) 2001 (Act) by pointing to the social and economic disruptions and restrictions caused by COVID-19.