WHO SHOULD READ THIS

• Restructuring and insolvency professionals.

THINGS YOU NEED TO KNOW

• Understanding liabilities from a payroll tax perspective can be complex, particularly due to the broad nature of the grouping provisions.
• Unless care is taken situations may arise where restructuring and insolvency professionals will be grouped with client entities, potentially exposing personal entities to joint and several liability for client entity debts.

WHAT YOU NEED TO DO

A spate of recent decisions approving liquidators’ remuneration on an ad valorembasis had caused some trepidation amongst insolvency practitioners facing the prospect of court fee approval.

Court of Appeal sets the record straight

The key point

On March 9, 2017, a full bench of the New South Wales Court of Appeal handed down a significant decision affecting approach to judicial review and approval of liquidator remuneration. Significantly, existing tension between decisions of different judges at first instance, and between NSW and Federal courts, has been resolved.

Introduction

In November 2016, the High Court of Australia heard a challenge brought by Clive Palmer in respect of the constitutional validity of the power of a liquidator to examine a former director of a company before the court. At the conclusion of that hearing, Kiefel J, as her Honour then was, stated that the Court was unanimously of the view that the challenge had failed and that reasons would be published later. Yesterday the High Court published those reasons.

The proceedings

This week’s TGIF considers In the matter of ACN 151 726 224 Pty Ltd (in liq) [2016] NSWSC 1801, where the Court dismissed a creditor’s application to remove liquidators who had refused to conduct public examinations of a director.

What happened?

On 18 November 2015, the District Court of New South Wales entered judgment against Ridley Capital Holdings Pty Limited (the Company) in the amount of $660,862.62.

This week’s TGIF considers the application of the principle in Re Universal Distributing and whether liquidators may claim an equitable lien to recover their costs and expenses, even if no assets are realised and no fund exists.

Background

In the recent Court of Appeal decision of Primary Securities Ltd v Willmott Forests Limited, liquidators had been appointed to an insolvent company which was the responsible entity of a managed investment forestry scheme.

Everything or Nothing! That is what the Queensland Court of Appeal has told us recently when it comes to assessing what a creditor is really owed for the purposes of standing to wind up a company

Background

A dispute arose between two parties involved in the management of Treadtel International Pty Ltd (Treadtel) whereby a Mr Cocco asserted that one of the two issued shares in Treadtel was held on trust for his benefit by the sole director’s wife, Mrs Crosher, because of an alleged share sale agreement.

In Suk v Hanjin Shipping Co Ltd [2016] FCA 1404, the Federal Court (a) provided guidance on how courts are to determine what stay arises upon recognition of foreign main proceedings under the Cross-Border Insolvency Act 2008; and (2) demonstrated that such recognition can cause maritime lien actions to be stayed.

Winding up a company when you are the trustee in bankruptcy of the sole director and shareholder can be more complicated than you think.