The insolvency profession (and the Queensland market in particular) has been abuzz this year with the issue of CORA – a shorthand reference to theEnvironmental Protection (Chain of Responsibility) Amendment Act 2016 (Qld).

What does it mean for insolvency practitioners? Can banks really be hit with a bill to clean up their borrowers’ environmental damage? Will turnaround and restructuring professionals refuse to accept appointments out of fear of falling foul of the new regime?

This post explains what you need to know.

The Federal Court of Australia has handed down a decision that is a salutary reminder to directors that, in any corporate tax planning, it is important not to miss the forest for the trees. In a recent Federal Court of Australia decision, contentious tax planning was found to constitute a breach of directors’ duties for the directors involved, resulting in them becoming personally liable for ATO debts of the company.

What happened?

Insolvency practitioners can benefit from registration errors on the Personal Property Securities Register (PPSR).

Stay alert to any mistakes made by secured parties, as unregistered or invalidly registered interests could vest in the company.

Common errors include:

Two recent cases provide a timely reminder of the opportunities offered by creditor-funded litigation as a mechanism for bringing funds into what would otherwise be unfunded administrations. Both cases are examples of flexible and “light touch” exercises of judicial discretion which duly recognise the constraints and complex commercial considerations invariably encountered by liquidators in unfunded liquidations.

Approval of litigation funding agreements

Can liquidators disclose legal advice to creditors without waiving privilege? Common interest privilege may assist.

Common interest privilege

Legal professional privilege protects communications between a lawyer and client created for the dominant purpose of seeking or providing legal advice or for current or anticipated litigation.

If advice is disclosed to third parties, there may be a waiver of that privilege.

Liquidators of insolvent Australian companies often pursue directors of the failed company in recovery proceedings for the benefit of creditors. Following a High Court of Australia decision in April 2016, it is now clear that a liquidator can join liability insurers of defendant directors in such proceedings, even when the insurer has denied liability under a policy. The liquidator, even though not a party to the contract, may then seek a declaration in the same proceedings that the insurer is liable to indemnify the insured defendant.

In CGU Insurance Limited v Blakeley [2016] HCA 2 previously summarised by William Roberts earlier this year the High Court of Australia found that a potential plaintiff can pursue a claim against an insolvent company’s insurer under that company’s insurance policy.

Two’s company when it comes to debt funding. Surely, three makes things a little crowded? It doesn’t have to be that way.

Summary

The unanimous decision of the High Court on 9 November 2016 in Timbercorp Finance Pty Ltd (in liq) v Collins & Timbercorp Finance Pty Ltd (in liq) v Tomes may increase the likelihood of satellite litigation by individual group members following group proceedings.

It follows from the decision that, if group proceedings are heard, group members are only bound by the answers to common questions and the pleadings; they are not, for example, precluded from raising individual claims which were not raised in the group proceeding.

This week’s TGIF considers Re Akron Roads Pty Ltd (in liq) (No 3) in which the Court held that the liquidators had standing to seek a declaration against an insurer arising from the assignment of rights under a policy.

WHAT HAPPENED?

The previous High Court decision