In this week’s TGIF, we consider the recent case of Vita Group Ltd, in the matter of Vita Group Ltd [2023] FCA 400, in which his Honour Justice Jackman outlined practical changes to the way schemes of arrangement should be implemented through the Federal Court to make them simpler, faster and more cost efficient.
Key takeaways
With increased stress in global, domestic, and regional economies, the number of Australian businesses at risk of bankruptcy is approaching a three-year high.
In a recent decision, Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88, lenders to the Arrium Group, a company that collapsed, have lost their appeal regarding the personal liability of the Chief Financial Officer and Group Treasurer. The NSW Supreme Court had previously dismissed the lenders' claims, and the Court of Appeal has now affirmed that decision.
In this week’s TGIF, we consider the Court of Appeal’s decision in Anchorage Capital Master Offshore Ltd v Sparkes [2023] NSWCA 88 and the challenges faced by lenders in accepting representations as to solvency and the financial position of borrowers.
Key takeaways
Introduction
In an environment of interest rate pressure, a cooling economy and global economic uncertainty, corporate insolvencies are a stark reality. The failure of construction companies has become regular news and ASIC recently released insolvency data that shows a marked uptick in Australian insolvencies in general.
Two recent judgments from different Australian courts have considered circumstances in which insolvency disputes can (or cannot) be arbitrated in accordance with pre-existing arbitration agreements. In particular, the decisions address the following two key issues:
- when certain insolvency claims can be arbitrated; and
- when a third party can participate in arbitral proceedings either claiming or defending ‘through or under’ a party to the arbitration agreement.
Key takeaways
In the last few years, case law has established several important key principles in trust law in the context of insolvent trustees.
It is now well established that:
In a previous article, 'In case of emergency: Using emergency power provisions to appoint a voluntary administrator' we discussed the use of emergency powers in a company’s constitution to appoint a voluntary administrator to a company, as well as the use of court assistance to cure defects in an appointment.
In Reel Action Sports Fishing Pty Ltd v Marine Engineering Consultants Pty Ltd, [1] the Court offered a timely warning to liquidators of the dangers of adopting and acting on an incorrect understanding of the ownership of contested property. The Court ordered damages against the liquidator personally, despite his position as agent for the company in liquidation.
Background