The New South Wales Supreme Court has found that a secured party cannot rely on its own mistake when registering on the Personal Property Securities Register (PPSR) to claim that the defective registration “temporarily perfects” its security interest.

The facts

This week’s TGIF considers Linc Energy Ltd (in Liq) v Chief Executive Dept of Environment & Heritage Protection [2017] QSC 53, in which the Queensland Supreme Court directed that the liquidators of Linc Energy were not justified in causing it to fail to comply with an environmental protection order

BACKGROUND

Earlier this month, the High Court of Australia unanimously decided that a judgment creditor cannot apply for a certificate to effect enforcement overseas in circumstances where the judgment debtor is bankrupt.

The Background of the Case

In March 1992, several properties in central Prague, which had been seized by and vested in the state of Czechoslovakia after World War Two, were restored to one Jan Emil (the son of the owners of the properties), who resided in Melbourne, Australia.

For many Australians superannuation can be an individual’s largest asset, the feeling of losing it when filing for bankruptcy is a very authentic concern for most of our clients. With certain components of the economy doing considerably well and other components enduring difficult economic times, bankruptcy numbers in Australia still continue to increase. Economists don’t speak about Australia’s two-speed economy much anymore, but it definitely still is two-speed.

A recent Victorian Supreme Court decision has resulted in the Commonwealth losing priority status for some $3.8m paid to the employees of a collapsed company, due to an unusual gap in the priority regime created under the Corporations Act.

In the matter of the désastres of Gail Alison Cochrane and Orb a.r.l.

1. Harbour Fund II LP v. (1) Orb a.r.l. (2) Litigation Capital Funding [2017]JRC171 ("the September judgment")

2. Harbour Fund II LP v. (1) Orb a.r.l. (2) Dr Gail Cochrane [2017]JRC007 ("the January judgment")

3. Representation of the Viscount re Cochrane and Orb a.r.l. [2017]JRC025 ("the February judgment")

On 28 March 2017, the Turnbull Government released draft legislation which would implement wide-ranging reforms to Australia’s corporate restructuring laws. The draft legislation focuses on reforms to the insolvent trading prohibition (Safe Harbour) and introducing a new stay on enforcing “ipso facto” clauses during certain restructuring procedures (Ipso Facto).

The world of insolvency is currently undergoing serious review, with potential reforms flying around thick and fast. But talk of safe harbours and unenforceable ipso facto clauses (see our update here) have overshadowed a significant development that commenced on 1 March 2017: the ability for external administrators1 to now assign their rights to sue under theCorporations Act 2001 (Cth) (Corporations Act).

On 31 January 2017, the Supreme Court of New South Wales handed down judgment in In the matter of OneSteel Manufacturing Pty Limited (administrators appointed). This important decision highlights the severe consequences that may follow from seemingly innocuous mistakes made when registering security interests.

The government has released draft legislation reforming insolvency laws to create a ‘safe harbour’ defence for directors faced with an insolvent trading claim, together with a statutory stay on the enforcement of ipso facto clauses when a party to a contract enters a formal administration process. This is good news for company directors and delivers on industry calls for law reform.

Background