After 448 days in court, over 85,000 documents and more than 10 judgments, a special bench of the Western Australian Court of Appeal handed down its decision in Westpac Banking Corporation v The Bell Group Ltd (in liq) (No.3) [2012] WASCA 157 (Bell Appeal Decision). The Bell Appeal Decision raises issues relating to the integrity of transactions with companies facing insolvency, which may create serious liability issues for company directors and lenders alike.
Why the Inquiry?
The NSW Government has announced an independent Inquiry into Construction Industry Insolvency in NSW. Announced by NSW Minister for Finance & Services the Hon. Greg Pearce, the Inquiry will examine the extent and causes of insolvency in the NSW construction industry and what reforms are needed to minimise the adverse effects of insolvency on sub-contractors.
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 Peter Grossman v Australian Securities and Investment Commission [2011] AATA 6, the Administrative Appeals Tribunal upheld a 5 year disqualification period against former director Mr Grossman who was at the helm of 3 companies that met financial demise. The Tribunal affirmed ASIC’s decision to grant the maximum disqualification period made pursuant to s 206F of the Corporations Act which was returned after finding Mr Grossman participated in phoenix activities deemed to lack commercial morality and blatantly disregard the interests of creditors.
On 7 December 2011, the Supreme Court of New South Wales (Court) delivered its decision in In the matter of Nugisi Pty Ltd [2011] NSWSC 1512, clarifying the circumstances in which courts will allow the appointment of a provisional liquidator.
Facts
The boundary between work life and private life is becoming less clear. In last month's Workplace View, we reported on a FIFO worker who successfully claimed workers' compensation for an injury he sustained while sleeping in employer-provided accommodation. This month, the Federal Court has upheld a workers' compensation claim by a Commonwealth worker whose 'private activities' with a 'male friend' in a motel room caused a glass light fitting above the bed to fall and strike her on the nose and mouth leaving her with physical and psychological injuries.
We recently released an e-alert on the law reforms on directors’ derivative liability. Although not directly part of the derivative liability reforms, the close of 2011 and the first half of 2012 has seen a variety of exposure drafts, submissions, and parliamentary jostling over another key area of directors’ liability – the Federal Government’s law reforms to counter phoenix activities.
The recent Victorian Supreme Court case of Grapecorp Management Pty Ltd (in liq) v Grape Exchange Management Euston Pty Ltd provided an interesting analysis of when set-off, pursuant to section 553C(1) of the Corporations Act 2001, may be claimed.
When can a set-off be claimed against debts owed to an insolvent company?