Summary
In an exciting week for insolvency, the Minister for Financial Services, Superannuation and Corporate Law has released a package of reforms to Australia’s corporate insolvency laws. This reform package includes:
On 25 January 2010, the United States Bankruptcy Court handed down its much anticipated decision in relation to an action brought in that court by two Lehman Brothers entities (the Lehman entities) against BNY Corporate Trustee Services Limited (BNY) (the US Decision).
The High Court of Australia’s Sons of Gwalia Ltd v Margaretic (Sons of Gwalia) decision recognised an aggrieved shareholder’s claim for damages (in relation to the acquisition of shares) on equal footing with those of an insolvent company’s other unsecured creditors. Dispute Resolution Associate, Justin Le Blond, examines the Government’s response to the decision.
There have recently been a number of significant developments in relation to schemes of arrangement. These include:
- the Federal Court refusing to make orders convening a meeting of CSR’s shareholders to vote on a demerger proposal by way of scheme, on public policy and commercial morality grounds relating to CSR’s potential asbestos liabilities
- the Government’s corporate law advisory body recommending significant reforms to the scheme regime, and
- developments regarding ‘hostile schemes’.
Each of these developments is discussed below.
The Bankruptcy Act 1966 (Cth) was amended to address the outcome of the High Court's decision in Cook v Benson1. It was held in that case that a trustee in bankruptcy could not recover amounts transferred from a retirement fund to another superannuation fund after the bankruptcy of the member as the amounts rolled over to the fund by or on behalf of the member were made in good faith and for consideration (ie the member had a right to receive benefits on retirement).
The significant increase in the number of companies passing into liquidation in the current economic climate has focussed Courts on whether they can summons a non-resident. Dispute Resolution Associate, Justin Le Blond, examines the position.
Introduction
By unanimous decision in Bruton Holdings Pty Limited (in liquidation) v Commissioner of Taxation1, five members of the High Court have reversed a controversial decision of the Full Federal Court to confirm that the Commissioner of Taxation (Commissioner) cannot ‘leap-frog’ other creditors in a liquidation.2
In a closely-watched case stemming from the demise of the Australian HIH insurance group, the UK House of Lords has ruled in McGrath & Anor & Others v Riddell and Others [2008] UKHL 21 that the English assets of four companies in that group, which are in liquidation in Australia and in ancillary insolvency proceedings in England, must be remitted to Australia for distribution under Australian insolvency law.
If an international airline that is a member of the International Air Transport Association (“IATA”) goes into insolvent external administration under the Australian Corporations Act 2001 (Cth) (the “Act”), will the IATA Clearing House Regulations (effective January 1, 2006) (the “CH Regulations”) continue to govern the relationship between IATA, the insolvent airline, and the other members of IATA? A recent judgment of Australia’s High Court clarifies these issues.
The House of Lords has ruled that English assets of the HIH group of companies are to be remitted to the Australian liquidators for distribution under Australian law. This briefing discusses the background to McGrath and another and others v Riddell and others [2008] UKHL 21 and the implications of the ruling.
Background
The House of Lords recently had to consider whether the English court should remit assets when faced with a request to do so by a foreign court.