From 1 July 2012, all insolvency notices must be registered with the Australian Securities and Investments Commission (ASIC) on its new online register at www.insolvencynotices.asic.gov.au. Consequently, ASIC’s online register now serves as a comprehensive noticeboard of companies’ affairs in relation to insolvency. More importantly, it provides important information for creditors.

ASIC’s new administrative powers to wind up companies strengthens the remedial measures that can be taken against business operators attempting to avoid liabilities by abandoning companies and should help employees access their entitlements.

The Corporations Amendment (Phoenixing and Other Measures) Act 2012 (Cth) (Act) will commence on 1 July 2012. 

In May a Parliamentary Joint Committee on Corporations and Financial Services concluded its report into the collapse of Trio Capital Ltd which will have significant repercussions for financial lines insurers in Australia.

What distinguishes the Trio Capital collapse from the other major financial collapses in Australia in recent years, of Westpoint and Storm Financial, is that Trio involved a fraud. The enquiry adopted observations by Justice Peter Garling of the New South Wales Supreme Court describing the scheme as:

In Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty Ltd [2012] VSC 112, Grape Exchange Management Euston Pty Ltd (Grape Exchange) managed a vineyard for Grapecorp Management Pty Ltd (Grapecorp). 

Receivers and employees are the greatest losers from a recent chain of court cases. Unless overturned on appeal or by legislation, the cases impose financial burdens on employees and administrative burdens on receivers.

At stake are employees' accrued leave entitlements and the statutory requirement to pay them once a company enters external administration. Employees of companies in receivership can lose entitlements they would ordinarily receive during liquidation depending entirely on the time at which a company enters administration or liquidation.

In light of the modern trend towards “pre-pack” arrangements as a legitimate restructuring solution, a recent judgment handed down in the Federal Court provides a timely reminder for insolvency practitioners that independence is paramount and liquidators can be removed upon the application of a creditor in circumstances where there is a perception of conflict.

While the winding up of a company is a last resort in the context of shareholder oppression, the discretion to order a winding up will be exercised by the Courts if the circumstances dictate that it is the most appropriate remedy, such as where it will provide finality and certainty for the shareholders without undermining the value of the company’s projects to a potential purchaser on winding up.

On 2 July 2012 the Australian Securities and Investment Commission launched a new website for the publication of insolvency and other notices.

The site provides a centralised and consolidated medium for the publication of insolvency related notices required by the Corporations legislation. Formerly, such notices were publicised through newspapers and other print media, and in some instances as this, systems transition continue to be published on both due to transactional issues.

The website was announced in late 2011, but only came in effect on 2 July 2012.

A particular focus of the inquiry will be the consequences of such insolvencies for sub-contractors.

In the wake of a recent spate of contractors becoming insolvent, the NSW Government has announced an inquiry into insolvency in the construction industry and is seeking submissions from interested parties. Submissions to the inquiry are due by 14 September 2012.

The proposed scaling back of directors' liability provisions is good news for insolvency practitioners.

In good news for insolvency practitioners, the NSW Government formally adopted the Council of Australian Governments guidelines on "Personal Liability for Corporate Fault" as NSW policy on 31 July 2012 .

What are the "Personal Liability for Corporate Fault" guidelines?